Execution Copy
CREDIT AGREEMENT
dated as of May 1, 1996
COMSTOCK RESOURCES, INC.,
COMSTOCK OIL & GAS, INC.,
COMSTOCK OIL & GAS - LOUISIANA, INC.
COMSTOCK OFFSHORE ENERGY, INC.,
THE BANKS PARTY HERETO
BANK ONE, TEXAS, N.A., CO-AGENT
AND
THE FIRST NATIONAL BANK OF CHICAGO, AS AGENT
TABLE OF CONTENTS
Section 1. Definitions......................................................2
1.1 Certain Definitions.........................................2
1.2 Other Definitions; Rules Of Construction...................14
SECTION 2. The Commitments.................................................14
2.1 Advances...................................................14
SECTION 3. The Advances....................................................16
3.1 Disbursement of Advances...................................16
3.2 Conditions of Advances.....................................18
3.3 Letter of Credit Reimbursement Payments....................20
3.4. Withholding Tax Exemption..................................23
SECTION 4. Payment and Prepayment; Fees; Change in
Circumstances...................................................24
4.1 Principal Payments.........................................24
4.2 Interest Payment...........................................25
4.3 Fees.......................................................25
4.4 Payment Method.............................................26
4.5 No Setoff or Deduction.....................................26
4.6 Payment on Non-Business Day; Payment
Computations...............................................27
4.7. Yield Protection...........................................27
4.8. Changes in Capital Adequacy Regulations....................27
4.9. Availability of Types of Advances..........................28
4.10.Funding Indemnification....................................28
4.11.Bank Statements; Survival of Indemnity.....................28
SECTION 5. Security........................................................29
5.1 Security Documents.........................................29
5.2 Guaranty...................................................30
5.3 Additional Security Documents..............................30
SECTION 6. Representations and Warranties..................................30
6.1 Corporate Existence and Power..............................30
6.2 Corporate Authority........................................31
6.3 Binding Effect.............................................31
6.4 Subsidiaries...............................................31
6.5 Liens......................................................31
6.6 Litigation.................................................31
6.7 Financial Condition........................................31
6.8 Use of Advance.............................................32
6.9 Security Documents.........................................32
6.10 Consents, Etc..............................................32
SECTION PAGE
6.11 Taxes..................................................... 32
6.12 Title to Properties....................................... 32
6.13 ERISA..................................................... 33
6.14 Environmental and Safety Matters.......................... 33
6.15 Direct Benefit............................................ 34
6.16 Solvency.................................................. 34
6.17 Disclosure................................................ 34
SECTION 7. Covenants.......................................................34
7.1 Affirmative Covenants......................................34
(a) Preservation of Corporate Existence,
7.2 Negative Covenants.........................................38
(a) Current Ratio..........................................38
(b) Tangible Net
Worth..................................................38
(c) Interest Coverage Ratio................................39
(d) Indebtedness...........................................39
(e) Liens..................................................39
(f) Merger; Acquisitions; Etc..............................40
(g) Disposition of Assets; Etc.............................41
(h) Nature of Business.....................................41
(i) Investments, Advance and Advances,
Contingent Liabilities.................................41
(j) Dividends..............................................42
(k) Transactions with Affiliates...........................42
(l) Subordinated Debt......................................42
(m) Payments and Modification
of Debt................................................42
(n) Additional Covenants...................................43
SECTION 8. Default.........................................................43
8.1 Events of Default..........................................43
8.2 Remedies...................................................45
CREDIT AGREEMENT Page ii
SECTION PAGE
8.3 Distribution of Proceeds...................................46
8.4 Letter of Credit Liabilities...............................47
SECTION 9. The Agent and the Banks.........................................48
9.1 Appointment; Nature of Relationship........................48
9.2 Powers.....................................................48
9.3 General Immunity...........................................48
9.4 No Responsibility for Loans, Recitals, Etc. ...............48
9.5 Action on Instruction of Banks.............................49
9.6 Employment of Agents and Counsel...........................49
9.7 Reliance on Documents; Counsel.............................49
9.8 Agent's Reimbursement and Indemnification..................49
9.9 Notice of Default .........................................50
9.10 Rights as a Bank...........................................50
9.11 Bank Credit Decision.......................................50
9.12 Successor Agent............................................50
9.13 Pro Rata Sharing by Banks..................................51
9.14 Determination of Borrowing Base, Etc.......................51
9.15 Co-Agent...................................................52
SECTION 10. Miscellaneous...................................................52
10.1 Amendments; Etc...........................................52
10.2 Notices...................................................52
10.3 Conduct No Waiver; Remedies Cumulative....................53
10.4 Reliance on and Survival of Various
Provisions................................................53
10.5 Expenses; Indemnification.................................53
10.6 Successors and Assigns....................................55
10.7 CHOICE OF LAW.............................................58
10.8 Table of Contents and Headings............................58
10.9 Construction of Certain Provisions........................58
10.10 Integration and Severability..............................59
10.11 Interest Rate Limitation..................................59
10.12 Counterparts..............................................9
10.13 Independence of Covenants.................................59
10.14 Consent to Jurisdiction...................................59
10.15 JURY TRIAL WAIVER.........................................60
10.16 Joint and Several Obligations; Contribution
Rights; Savings Clause....................................60
CREDIT AGREEMENT Page iii
10.17 Consents to Renewals, Modifications and
Other Actions and Events..................................62
10.18 Waivers, Etc..............................................63
10.19 Confidentiality...........................................63
EXHIBIT
A.......Bridge Note
B.......Consent and Amendment of Security Documents
C.......Revolving Credit Note
D.......Term Note
E.......Request for Loan
F.......Assignment and Acceptance
G.......Assumption Agreement
SCHEDULES
6.4.....Subsidiaries
7.2(d)..Permitted Indebtedness
7.2(e)..Permitted Liens
7.2(i)..CRI Guaranteed Indebtedness
CREDIT AGREEMENT Page iv
CREDIT AGREEMENT
THIS AGREEMENT, dated as of May 1, 1996, is among COMSTOCK RESOURCES, INC.
a Nevada corporation ("CRI"), COMSTOCK OIL & GAS, INC., a Nevada corporation
("COG"), COMSTOCK OIL & GAS - LOUISIANA, INC., a Nevada corporation ("COGL"),
COMSTOCK OFFSHORE ENERGY, INC., a Delaware corporation ("COE") (CRI, COG, COGL
and COE may hereinafter collectively be referred to as the "Borrowers"), the
lenders party hereto from time to time (collectively, the "Banks" and
individually, a "Bank"), BANK ONE, TEXAS, N.A., as co-agent for the Banks (in
such capacity, the "co-agent") and THE FIRST NATIONAL BANK OF CHICAGO, as agent
for the Banks (in such capacity, the "Agent").
RECITALS
A. The Borrowers, Bank One, Texas, N.A., NBD Bank and NBD Bank, as agent
for Bank One, Texas, N.A. and itself executed a Credit Agreement dated July 31,
1995, as amended (the "Existing Credit Agreement"), which amended and restated a
Credit Agreement dated as of September 30, 1994, as amended, which in turn
amended and restated a Credit Agreement dated as of November 15, 1993, as
amended. The First National Bank of Chicago is the assignee of all rights and
interests of NBD Bank under the Existing Credit Agreement, both in NBD Bank's
capacity as a bank and as agent thereunder and under all agreements and
documents executed in connection therewith.
B. The Borrowers have requested that the Banks amend and restate the
Existing Credit Agreement as herein provided, replacing and refinancing the
indebtedness thereunder with a three year secured revolving credit facility
providing for revolving credit loans in the aggregate principal amount of
$166,000,000 converting to a two year term loan, and a bridge loan in the
aggregate principal amount of $10,000,000 in order to provide bridge financing
for the Borrowers' acquisition of properties from Black Stone Oil Company, and
the Banks are willing to establish such a credit facility and loans in favor of
the Borrowers and amend and restate the Existing Credit Agreement on the terms
and conditions herein set forth.
AGREEMENT
In consideration of the premises and of the mutual agreements herein
contained, the parties hereto agree that the Existing Credit Agreement shall be
amended and restated as follows:
SECTION 1. Definitions
1.1 Certain Definitions. As used herein, the following terms shall have the
following respective meanings:
"Advances" shall mean the Loans and the Letter of Credit Advances.
"Advance Date" shall mean each date for the making, continuation or
conversion of an Advance as specified in the notice delivered by the Borrowers,
or any of them, permitted by this Agreement.
"Affiliate", when used with respect to any person shall mean any other
person which, directly or indirectly, controls or is controlled by or is under
common control with such person or any other person which is owned 5% or more by
such person or any Subsidiary or other Affiliate of such person. For purposes of
this definition "control" (including the correlative meanings of the terms
"controlled by" and "under common control with"), with respect to any person,
shall mean possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such person, whether through the
ownership of voting securities or otherwise.
"Applicable Margin" shall mean, with respect to any Eurodollar Loan,
Floating Rate Loan and Commitment Fee, as the case may be, the applicable
percentage set forth in the table below based upon a fraction, expressed as a
percentage, determined as of the last day of each fiscal quarter of CRI, the
numerator of which is the daily average of the Advances outstanding during such
fiscal quarter and the denominator of which is the daily average of the
Borrowing Base during such fiscal quarter (the "Utilization Percentage"):
================================================================================
Utilization Eurodollar Floating Commitment
Percentage "UP" Rate Loan Rate Loan Fee under
Section 4.3(a)(i)
- ------------------------------------------------------------------------------
UP>90% 2.00% 0.50% .50%
- ------------------------------------------------------------------------------
UP 75% to 90% 1.75% 0.50% .375%
- ------------------------------------------------------------------------------
UP 55% to 75% 1.50% 0.25% .375%
- ------------------------------------------------------------------------------
UP Less than 55% 1.25% 0% .25%
==============================================================================
The Utilization Percentage shall be determined by the Agent at the end of each
fiscal quarter and shall remain in effect for the following fiscal quarter of
CRI, provided that the Agent shall also determine the Utilization Percentage
promptly after the initial issuance of any Subordinated Debt
CREDIT AGREEMENT Page 2
and adjust the Applicable Margin upon such determination, and the Applicable
Margin in effect on the first day of any Interest Period of any Eurodollar Loan
shall remain in effect for the entire Interest Period. Notwithstanding the above
or anything else in this Agreement, (a) upon and during the continuance of any
Event of Default, the Applicable Margin shall be based on the highest possible
Applicable Margin described in the table above, regardless of the Utilization
Percentage and (b) at any time any amount is outstanding under the Bridge Loan,
the Applicable Margin with respect to Floating Rate Loans and Commitment Fees
shall be 0.50% and the Borrowers shall not be entitled to obtain Eurodollar
Loans.
"Bank Obligations" shall mean all indebtedness, obligations and
liabilities, whether now or hereafter arising, of the Borrowers to the Agent or
any Bank pursuant to any of the Loan Documents.
"Black Stone" shall mean Black Stone Oil Company, a Texas corporation.
"Borrowing Base" shall mean an amount equal to the value of the Collateral
determined by the Agent and the Co-Agent (or by each of the Banks as described
in Section 9.14) in their sole discretion, based on the Agent's, the Co-Agent's
or each Bank's, as the case may be, customary and standard practices in lending
to oil and gas companies generally, including without limitation their standard
engineering criteria and oil and gas lending criteria (and it is acknowledged
and agreed that such customary and standard practices, including without
limitation such engineering criteria and oil and gas lending criteria, shall be
determined by the Agent, the Co-Agent and each Bank, as the case may be, in
their sole discretion, and such determination shall be conclusive and binding).
"Bridge Loan" means any borrowing under Section 3.1 evidenced by the Bridge
Note and made pursuant to Section 2.1(c).
"Bridge Note" means any promissory note of the Borrowers evidencing the
Bridge Loan, in substantially the form annexed hereto as Exhibit A, as amended
or modified from time to time and together with any promissory note or notes
issued in exchange or replacement therefor. "Business Day" means (i) with
respect to any borrowing, payment or rate selection of Eurodollar Loans, a day
(other than a Saturday or Sunday) on which banks generally are open in Chicago
and New York for the conduct of substantially all of their commercial lending
activities and on which dealings in United States dollars are carried on in the
London interbank market and (ii) for all other purposes, a day (other than a
Saturday or Sunday) on which banks generally are open in Chicago for the conduct
of substantially all of their commercial lending activities.
"Change in Control" means the acquisition by any Person, or two or more
Persons acting in concert, of beneficial ownership (within the meaning of Rule
13d-3 of the Securities
CREDIT AGREEMENT Page 3
and Exchange Commission under the Securities Exchange Act of 1934) of more than
50% of the outstanding shares of voting stock of CRI.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time, and the regulations thereunder.
"CMC" shall mean Comstock Management Corporation, a Nevada corporation.
"CNG" shall mean Comstock Natural Gas, Inc., a Nevada corporation.
"CNG/CRI Guaranty Formula" shall mean, as of any date, the sum of (a) an
amount equal to 70% of the amount of Eligible CNG Accounts Receivable (other
than those described in clause (b)) plus (b) an amount equal to 90% of the
amount of Eligible CNG Accounts Receivable supported by letters of credit
confirmed by a financial institution acceptable to the Agent in its reasonable
discretion; provided, that, the amount of Eligible CNG Accounts Receivable
described in this clause (b) included in the CNG Borrowing Base may not exceed
50% of the aggregate amount of Eligible CNG Accounts Receivable.
"Collateral" shall have the meaning ascribed thereto in Section 5.1(a)
hereof.
"Commitments" shall mean, with respect to each Bank, the commitment of each
such Bank to make Revolving Credit Advances and the Term Loan pursuant to
Sections 2.1(a) and (b), in amounts not exceeding in aggregate principal amount
outstanding at any time the respective commitment amount for each Bank set forth
next to the name of each such Bank on the signature pages hereof or established
pursuant to Section 10.6, as the case may be, as such amount may be reduced from
time to time pursuant to Sections 2.1(a) or (b).
"Consent and Amendment of Security Documents" shall mean the consent and
amendment of security documents entered into by the Borrowers, the Guarantors
and the Agent pursuant to this Agreement in substantially the form of Exhibit B,
as amended or modified from time to time.
"Consolidated" or "consolidated" shall mean, when used with reference to
any financial term in this Agreement, the aggregate for two or more Persons of
the amount signified by such term for all such Persons determined on a
consolidated basis and in accordance with GAAP.
"Consolidated Adjusted Cash Flow" shall mean, for any period, the
Consolidated Net Income for such period taken as a single accounting period,
plus, to the extent deducted in determining such Consolidated Net Income, all
depreciation, amortization and depletion expense, and other non cash charges,
provided that in determining Consolidated Net Income as used in this definition
the following shall be excluded, without duplication: (a) the income of any
Person accrued prior to the date such Person is merged into or consolidated with
a Borrower or such
CREDIT AGREEMENT Page 4
Person's assets are acquired by a Borrower, (b) the proceeds of any insurance
policy, (c) gains or losses from the sale, exchange, transfer or other
disposition of property or assets of any Borrower and related tax effects in
accordance with GAAP and (d) any extraordinary or non-recurring gains of any
Borrower, and related tax effects in accordance with GAAP.
"Consolidated Interest Expense" shall mean, for any period, total interest
and related expense (including, without limitation, that portion of any
capitalized lease obligation attributable to interest expense in conformity with
GAAP, amortization of debt discount, all capitalized interest, the interest
portion of any deferred payment obligations, all commissions, discounts and
other fees and charges owed with respect to letters of credit (other than
letters of credit for CNG utilized for purchasing natural gas in aggregate
amount not exceeding $1,000,000) and bankers acceptance financing, the net costs
and net payments under any interest rate hedging, cap or similar agreement or
arrangement, prepayment charges, agency fees, administrative fees, commitment
fees and capitalized transaction costs allocated to interest expense) paid,
payable or accrued during such period, without duplication for any period, with
respect to all outstanding Indebtedness of CRI and its Subsidiaries, all as
determined for CRI and its Subsidiaries on a consolidated basis for such period
in accordance with GAAP.
"Consolidated Net Income" shall mean, for any period, the net income of CRI
and its Subsidiaries for such period, determined in accordance with GAAP, minus,
to the extent not deducted from such net income, the amount of allowable cash
dividends paid during such period on the 1994 Preferred Stock and on the 1995
Preferred Stock.
"Contingent Liabilities" of any person shall mean, as of any date, all
obligations of such person or of others for which such person is contingently
liable, as obligor, guarantor, surety or in any other capacity, or in respect of
which obligations such person assures a creditor against loss or agrees to take
any action to prevent any such loss (other than endorsements of negotiable
instruments for collection in the ordinary course of business and
indemnifications typical and customary in the ordinary course of such person's
oil and gas business in connection with operating agreements and other
agreements executed in the ordinary course of such person's oil and gas
business), including without limitation all reimbursement obligations of such
person in respect of any letters of credit, surety bonds or similar obligations
and all obligations of such person to advance funds to, or to purchase assets,
property or services from, any other person in order to maintain the financial
condition of such other person.
"Continuing Directors" of any person shall mean the directors of such
person on the Effective Date and each other director of such person if such
other director's nomination for election to the Board of Directors of such
person is recommended by a majority of the then Continuing Directors of such
Board of Directors.
"CPI" shall mean Crosstex Pipeline, Inc., a Texas corporation.
CREDIT AGREEMENT Page 5
"Current Assets" and "Current Liabilities" shall mean all assets or
liabilities of CRI and its Subsidiaries, on a consolidated basis respectively,
which should be classified as current assets and current liabilities in
accordance with GAAP; provided that the calculation of Current Assets shall not
include receivables of the Borrowers owing by any Affiliate in excess of 90 days
or subject to any dispute or offset or otherwise unacceptable, advances by the
Borrowers to any Affiliate or any asset classified as a Current Asset solely
because it is held for sale, and Current Liabilities shall not include the
current maturities of any Indebtedness or the Bridge Note.
"Default" shall mean any Event of Default or any event or condition which
might become an Event of Default with notice or lapse of time or both.
"Dollars" and "$" shall mean the lawful money of the United States of
America.
"Effective Date" shall mean the effective date specified in the final
paragraph of this Agreement.
"Eligible CNG Accounts Receivable" shall mean, as of any date, those trade
accounts receivable owned by CNG which are payable in Dollars, valued at the
face amount thereof less sales, excise or similar taxes and less returns,
discounts, claims, credits and allowances of any nature at any time issued,
including without limitation rebates and advertising allowances receivable,
owing, granted, outstanding, available or claimed, but shall not include any
such account receivable (a) that is not a bona fide existing obligation created
by the sale and actual delivery of inventory, goods or other property or the
furnishing of services or other good and sufficient consideration to customers
of CNG in the ordinary course of business, (b) that is more than 60 days past
due, (c) that is subject to any known dispute, contra-account, defense, offset
or counterclaim or any lien, encumbrance or security interest, (d) that is
payable by any person located outside the United States (which shall not be
deemed to include any territories of the United States) and is not supported by
a letter of credit issued by banks acceptable to the Agent in its reasonable
discretion, (e) that is payable by the United States or any of its departments,
agencies or instrumentalities, (f) that is payable by any person that is the
subject of any proceeding seeking to adjudicate it a bankrupt or insolvent or
seeking liquidation, winding up or reorganization, arrangement, adjustment,
protection, relief or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief or protection of debtors or
seeking the appointment of a receiver, trustee, custodian or other similar
official for it or for any substantial part of its property, or that is not
generally paying its debts as they become due or has admitted in writing its
inability to pay its debts generally or has made a general assignment for the
benefit of creditors, (g) which is evidenced by a promissory note or other
instrument, (h) that is payable by any person, the aggregate accounts owing to
CNG aggregate, are in excess of 10% of all Eligible CNG Accounts Receivable (but
only to the extent of the amount in excess of 10%), unless such receivable is
secured by a letter of credit, or (i) for which the prospect of payment or
performance is or will be impaired as determined by the Agent in its reasonable
discretion.
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"Environmental Laws" at any date shall mean all provisions of law, statute,
ordinances, rules, regulations, judgments, writs, injunctions, decrees, orders,
awards and standards promulgated by the government of the United States of
America or any foreign government or by any state, province, municipality or
other political subdivision thereof or therein or by any court, agency,
instrumentality, regulatory authority or commission of any of the foregoing
concerning the protection of, or regulating the discharge of substances into,
the environment.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with any successor statute thereto and the
regulations thereunder.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) which (i) together with the Borrowers or any Subsidiary, would be
treated as a single employer under Section 414(b) or (c) of the Code or (ii) for
purposes of liability under Section 412(C)(11) of the Code, the lien created
under Section 412(n) of the Code or for a tax imposed for failure to meet
minimum funding standards under Section 4971 of the Code, a member of the same
affiliated service group (within the meaning of Section 401(m) of the Code) as
the Borrowers or any Subsidiary, or any other trade or business described in
clause (i) above.
"Eurodollar Base Rate" shall mean, with respect to a Eurodollar Loan for
the relevant Eurodollar Interest Period, the rate determined by the Agent to be
the rate at which First Chicago offers to place deposits in Dollars with
first-class banks in the London interbank market at approximately 11 a.m.
(London time) two Business Days prior to the first day of such Eurodollar
Interest Period, in the approximate amount of First Chicago's relevant
Eurodollar Loan and having a maturity approximately equal to such Eurodollar
Interest Period.
"Eurodollar Interest Period" or "Interest Period" shall mean, with respect
to a Eurodollar Loan, a period of one, two, three or six months commencing on a
Business Day selected by the Borrowers pursuant to this Agreement. Such
Eurodollar Interest Period shall end on the day which corresponds numerically to
such date one, two, three or six months thereafter, provided, however, that if
there is no such numerically corresponding day in such next, second, third or
sixth succeeding month, such Eurodollar Interest Period shall end on the last
Business Day of such next, second, third or sixth succeeding month. If a
Eurodollar Interest Period would otherwise end on a day which is not a Business
Day, such Eurodollar Interest Period shall end on the next succeeding Business
Day, provided, however, that if said next succeeding Business Day falls in a new
calendar month, such Eurodollar Interest Period shall end on the immediately
preceding Business Day.
"Eurodollar Loan" shall mean a Loan which bears interest at a Eurodollar
Rate.
"Eurodollar Rate" shall mean, with respect to a Eurodollar Loan for the
relevant Eurodollar Interest Period, the sum of (i) the quotient of (a) the
Eurodollar Base Rate applicable
CREDIT AGREEMENT Page 7
to such Eurodollar Interest Period, divided by (b) one minus the Reserve
Requirement (expressed as a decimal) applicable to such Eurodollar Interest
Period, plus (ii) the Applicable Margin.
"Event of Default" shall mean any of the events or conditions described in
Section 8.1.
"Federal Funds Rate" shall mean, for any day, an interest rate per annum
equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 10 a.m. (Chicago
time) on such day on such transactions received by the Agent from three Federal
funds brokers of recognized standing selected by the Agent in its sole
discretion.
"Floating Rate" shall mean the per annum rate equal to the sum of (a) (i)
with respect to Revolving Credit Loans, the Term Loan and any other amounts
owing hereunder other than the Bridge Loan, the Applicable Margin, and (ii) with
respect to the Bridge Loan, three percent (3.0%) per annum, plus (b) the greater
of (i) the per annum rate announced by the Agent from time to time as its
"corporate base rate", and (ii) the sum of one-half percent (1/2%) per annum
plus the Federal Funds Rate, such Floating Rate to change simultaneously with
any change in such "corporate base rate" or Federal Funds Rate, as the case may
be;
all as conclusively determined in good faith by the Agent, such sum to be
rounded up, if necessary, to the nearest whole multiple of 1/16 of 1%.
"Floating Rate Loan" shall mean any Loan bearing interest at the Floating
Rate.
"GAAP" shall mean generally accepted accounting principles applied on a
basis consistent with that reflected in the financial statements referred to in
Section 6.7 hereof.
"Guarantor" shall mean each present and future Subsidiary of any of the
Borrowers (other than any Borrower and Comstock DR-II Oil and Gas Acquisition
Limited Partnership).
"Guaranty" shall mean each guaranty of each Guarantor delivered at any time
pursuant to Section 5.2.
"Hydrocarbons" shall mean oil, gas casinghead, gas, drip gasoline, natural
gas and condensates and all other liquid or gaseous hydrocarbons.
"Indebtedness" of any person shall mean, as of any date, (a) all
obligations of such Person for borrowed money, (b) all obligations which are
secured by any lien or
CREDIT AGREEMENT Page 8
encumbrance existing on property owned by such Person whether or not the
obligation secured thereby shall have been assumed by such Person, other than
those obligations which are incurred in the ordinary course of business and are
not required to be shown as a liability on a balance sheet in accordance with
GAAP, (c) all obligations as lessee under any lease which, in accordance with
GAAP, is or should be capitalized on the books of the lessee, (d) the deferred
purchase price for goods, property or services acquired by such Person, and all
obligations of such Person to purchase such goods, property or services where
payment therefore is required regardless of whether or not delivery of such
goods or property or the performance of such services is ever made or tendered,
other than unsecured trade payables incurred in the ordinary course of business
(e) all obligations of such Person to advance funds to, or to purchase property
or services from, any other Person in order to maintain the financial condition
of such Person, (f) all obligations of such person in respect of any interest
rate or currency swap, rate cap or other similar transaction (valued in an
amount equal to the highest termination payment, if any, that would be payable
by such person upon termination for any reason on the date of termination), and
(g) all obligations of such person or of others for which such person is
contingently liable, as guarantor, surety or in any other similar capacity, or
in respect of which obligations such person assures a creditor against loss or
agrees to take any action to prevent any such loss (other than endorsements of
negotiable instruments for collection in the ordinary course of business),
including without limitation all reimbursement obligations of such person in
respect of any letters of credit, surety bonds or similar obligations and all
obligations of such person to advance funds to, or to purchase assets, property
or services from, any other person in order to maintain the condition, financial
or otherwise, of such other person.
"Interest Payment Date" shall mean (a) with respect to each Eurodollar
Loan, the last day of each Eurodollar Interest Period with respect to such
Eurodollar Loan and, in the case of any Eurodollar Interest Period exceeding
three months, those days that occurred during such Eurodollar Interest Period at
intervals of three months after the first day of such Eurodollar Interest
Period, (b) in all other cases, the last Business Day of each month, commencing
with the first such day after the Effective Date, and (c) the Termination Date
with respect to Revolving Credit Loans, Maturity Date - Bridge Loan with respect
to the Bridge Loan and the Maturity Date - Term Loan with respect to the Term
Loan.
"Lending Installation" shall mean, with respect to a Bank or the Agent, any
office, branch, subsidiary or affiliate of such Bank or the Agent.
"Letter of Credit" shall mean a standby letter of credit having a stated
expiry date not later than twelve months after the date of issuance and not
later than the fifth Business Day before the Termination Date, issued by the
Agent on behalf of the Banks for the account of the Borrowers under an
application and related documentation acceptable to the Agent requiring, among
other things, immediate reimbursement by the Borrowers to the Agent in respect
of all drafts or other demand for payment honored thereunder and all expenses
paid or incurred by the Agent relative thereto.
CREDIT AGREEMENT Page 9
"Letter of Credit Advance" shall mean any issuance of a Letter of Credit
pursuant to this Agreement, in which each Bank acquires a pro rata risk
participation.
"Letter of Credit Documents" shall have the meaning ascribed thereto in
Section 3.3(b)(i).
"Lien" shall mean any pledge, assignment, hypothecation, mortgage, security
interest, deposit arrangement, option, conditional sale or title retaining
contract, sale and leaseback transaction, financing statement filing, lessor's
or lessee's interest under any lease, subordination of any claim or right, or
any other type of lien, charge, encumbrance, preferential arrangement or other
claim or right.
"Loan Documents" shall mean this Agreement, the Notes, the Security
Documents, the environmental certificate and any other agreement, instrument or
document executed at any time pursuant to, in connection with, or otherwise
relating to this Agreement.
"Loans" mean the Revolving Credit Loans, the Term Loan and the Bridge Loan.
"Majority Banks" shall mean Banks holding not less than 66% of the
aggregate principal amount of the Loans then outstanding (or 66% of the
Commitments if no Loans are then outstanding).
"Material Adverse Effect" shall mean a material adverse effect on or change
in (a) the business, property (including without limitation the Collateral and
further including without limitation the Purchased Black Stone Assets),
operations or condition, financial or otherwise, of the Borrowers and the
Guarantors on a consolidated basis, (b) the ability of any Borrower or any
Guarantor to perform its obligations under any Loan Document or (c) the validity
or enforceability or the rights and remedies of the Agent or any Bank under any
Loan Document.
"Maturity Date - Bridge Loan" shall mean, with respect to the Bridge Loan,
the earlier to occur of (a) December 31, 1996 and (b) the date on which the
Bridge Loan shall be accelerated pursuant to Section 8.2.
"Maturity Date - Term Loan" shall mean, with respect to the Term Loan, the
earlier to occur of (a) the second anniversary of the date the Term Loan is
made, which in any event shall be no later than the fifth anniversary of the
Effective Date, and (b) the date on which the Term Loan shall be accelerated
pursuant to Section 8.2.
"Mortgages" shall have the meaning ascribed thereto in Section 5.1.
"Multiemployer Plan" shall mean any "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA or Section 414(f) of the Code.
CREDIT AGREEMENT Page 10
"1995 Preferred Stock" shall mean the 1,500,000 shares of Series 1995
Convertible Preferred Stock issued by CRI.
"1994 Preferred Stock" shall mean the 600,000 shares of Series 1994
Convertible Preferred Stock issued by CRI and the 1,000,000 shares of 1994
Series B Convertible Preferred Stock issued by CRI.
"Notes" means the Revolving Credit Notes and the Term Notes.
"Oil and Gas Interests" shall mean all leasehold interests, mineral fee
interest, overriding royalty and royalty interests, net revenue and net working
interest and all other rights and interests relating to Hydrocarbons, including
without limitation any reserves thereof.
"Overdue Rate" shall mean (a) in respect of principal of Floating Rate
Loans, a rate per annum that is equal to the sum of three percent (3%) per annum
plus the Floating Rate, (b) in respect of principal of Eurodollar Loans, a rate
per annum that is equal to the sum of three percent (3%) per annum plus the per
annum rate in effect thereon until the end of the then current Eurodollar
Interest Period for such Loan and, thereafter, a rate per annum that is equal to
the sum of three percent (3%) per annum plus the Floating Rate, and (c) in
respect of other amounts payable by the Company hereunder (other than interest),
a per annum rate that is equal to the sum of three percent (3%) per annum plus
the Floating Rate.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Permitted Liens" shall mean the Liens permitted by Section 7.2(e) hereof.
"Person" shall include an individual, a corporation, an association, a
partnership, a trust or estate, a joint stock company, an unincorporated
organization, a joint venture, a government (foreign or domestic), and any
agency or political subdivision thereof, or any other entity.
"Plan" shall mean, with respect to any Person, any employee benefit or
other plan (other than a Multiemployer Plan) maintained by such Person for its
employees and covered by Title IV of ERISA or to which Section 412 of the Code
applies.
"Pro Rata Share" shall mean, as to obligations of the Banks, the percentage
set forth opposite its name on the signature pages hereof or otherwise
established pursuant to Section 10.6. As to obligations owing to the Banks,
shall mean: (a) in the case of payments of principal and interest on the Loans,
in an amount with respect to each Bank equal to the product of such amount
received times the ratio which the outstanding principal balance of its Note or
Notes bears to the outstanding principal balance of all Notes, and (b) in the
case of all other amounts payable hereunder (other than as otherwise noted with
respect to fees) and other
CREDIT AGREEMENT Page 11
amounts, in an amount with respect to each Bank equal to the product of such
amount received times the ratio which the Commitment of such Bank bears to the
Commitments of all Banks.
"Proved Developed Reserves" shall mean all Oil and Gas Interests which, to
the satisfaction of the Agent, are estimated, with reasonable certainty, and as
demonstrated by geological and engineering data acceptable to the Agent, to be
economically recoverable from existing wells requiring no more than minor
workover operations from existing completion intervals open for production and
which are producing, and have proven reserves of, Hydrocarbons.
"Purchase Documents" shall mean all purchase agreements, purchase and sale
agreements and other agreements and documents between CRI and Black Stone and
certain working interest owners for the purchase by CRI of the properties
described therein, together with all other agreements and documents delivered
pursuant to Section 3.2(a)(xii).
"Purchased Black Stone Assets" shall mean all oil and gas interests,
capital stock and other assets being purchased pursuant to the Purchase
Documents.
"Reportable Event" shall mean a reportable event as described in Section
4043(b) of ERISA including those events as to which the thirty (30) day notice
period is waived under Part 2615 of the regulations promulgated by the PBGC
under ERISA.
"Reserve Requirement" means, with respect to a Eurodollar Interest Period,
the maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on Eurocurrency
liabilities.
"Revolving Credit Advance" shall mean any Revolving Credit Loan or any
Letter of Credit Advance.
"Revolving Credit Loan" means any loan under Section 3.1 evidenced by the
Revolving Credit Notes and made pursuant to Section 2.1(a).
"Revolving Credit Note" shall mean any promissory note of the Borrowers
evidencing the Revolving Credit Loans, in substantially the form annexed hereto
as Exhibit C, as amended or modified from time to time and together with any
promissory note or notes issued in exchange or replacement therefor.
"Security Agreements" shall have the meaning ascribed thereto in Section
5.1.
"Security Documents" shall have the meaning ascribed thereto in Section
5.1.
"Subsidiary" of any person shall mean any other person (whether now
existing or hereafter organized or acquired) in which (other than directors
qualifying shares required by
CREDIT AGREEMENT Page 12
law) at least a majority of the securities or other ownership interests of each
class having ordinary voting power or analogous right (other than securities or
other ownership interests which have such power or right only by reason of the
happening of a contingency), at the time as of which any determination is being
made, are owned, beneficially and of record, by such person or by one or more of
the other Subsidiaries of such person or by any combination thereof. Unless
otherwise specified, reference to "Subsidiary" shall mean a Subsidiary of CRI.
"Subordinated Debt" shall mean Indebtedness of CRI which satisfies each of
the following:
(a) the aggregate principal amount thereof does not exceed $100,000,000;
(b) the final maturity thereof shall be no earlier than 10 years after its
issuance, and there shall be no required payments, prepayments (other than
required prepayments upon a change of control and upon a disposal of a
substantial amount of assets, in each case on terms and conditions acceptable to
the Majority Banks) or other defeasance thereof, directly or indirectly, prior
to such final maturity; and
(c) such Indebtedness shall be subordinated to the Bank Obligations
pursuant to written subordination provisions in form and substance satisfactory
to the Majority Banks.
"Swap Agreement" shall mean any interest rate or oil and gas commodity swap
agreement, interest cap or collar agreement or other financial agreement or
arrangement designed to protect the Borrowers or CNG against fluctuations in
interest rates or oil and gas prices.
"Tangible Net Worth" of any Person shall mean, as of any date, (a) the
amount of any capital stock or similar ownership liability plus (or minus in the
case of a deficit) the capital surplus and retained earnings of such Person and
the amount of any foreign currency translation adjustment account shown as a
capital account of such Person, less (b) the net book value of all items of the
following character which are included in the assets of such Person: (i)
goodwill, including without limitation, the excess of cost over book value of
any asset, (ii) organization or experimental expenses, (iii) unamortized debt
discount and expense, (iv) stock discount and expense, (v) patents, trademarks,
trade names and copyrights, (vi) treasury stock, (vii) deferred taxes and
deferred charges, (viii) franchises, licenses and permits, and (ix) all other
assets which are deemed intangible assets under GAAP; provided, that such
calculation of Tangible Net Worth under this definition shall not include
receivables of such Person which are owing by any Affiliate or advances by such
Person to any Affiliate.
"Term Loan" means any borrowing under Section 3.1 evidenced by the Term
Note and made pursuant to Section 2.1(b).
CREDIT AGREEMENT Page 13
"Term Note" means any promissory note of the Borrowers evidencing the Term
Loan, in substantially the form annexed hereto as Exhibit D, as amended or
modified from time to time and together with any promissory note or notes issued
in exchange or replacement therefor.
"Termination Date" shall mean the earlier to occur of (a) the third
anniversary of the Effective Date or such earlier date as the Borrowers may
elect, with five Business Days prior written notice to the Banks, to convert the
Revolving Credit Advances to the Term Loan under Section 2.1(b), and (b) the
date on which the Commitments shall be terminated pursuant to Section 2.1(a) or
8.2.
"Total Liabilities" of any Person shall mean, as of any date, all
obligations which, in accordance with GAAP, are or should be classified as
liabilities on a balance sheet of such Person.
"Type" shall mean, with respect to any Advance, its nature as a Floating
Rate Loan, Eurodollar Loan or Letter of Credit Advance.
1.2 Other Definitions; Rules of Construction. As used herein, the terms
"Agent," "Banks," "CRI", "COG", "COGL", "COE", "Borrowers" and "this Agreement"
shall have the respective meanings ascribed thereto in the introductory
paragraph of this Agreement. Such terms, together with the other terms defined
in Section 1.1, shall include both the singular and the plural forms thereof and
shall be construed accordingly. All computations required hereunder and all
financial terms used herein shall be made or construed in accordance with GAAP
unless such principles are inconsistent with the express requirements of this
Agreement.
SECTION 2. The Commitments.
2.1 Advances. (a) Each Bank agrees, for itself only, to advance and to
readvance, subject to the terms and conditions herein set forth, to the
Borrowers at any time and from time to time from the Effective Date hereof until
the Termination Date amounts equal to such Bank's Pro Rata Share of such
aggregate amounts as any Borrower may from time to time request, provided that
no Revolving Credit Loans may be made if the aggregate outstanding amount of all
Revolving Credit Loans to all Borrowers would exceed the lesser of the
Commitments or the Borrowing Base, and the aggregate Letter of Credit Advances
may not exceed the lesser of $1,000,000 or the CNG/CRI Guaranty Formula. Each
Loan made hereunder shall be evidenced by the Notes, which shall mature and bear
interest as set forth in Section 4 hereof and in such Notes. On the Effective
Date, the Borrowers shall issue and deliver to each Bank a Revolving Credit Note
in the principal amount of such Banks' Commitment for the period beginning on
the Effective Date. Each Revolving Credit Loan which is a Floating Rate Loan
shall be in a minimum amount of $500,000 and in integral multiples of $100,000
and each Revolving Credit Loan which is a Eurodollar Loan shall be in a minimum
CREDIT AGREEMENT Page 14
amount of $3,000,000 and in integral multiples of $1,000,000. Subject to the
terms and conditions of this Agreement, the Borrowers may borrow, prepay
pursuant to Section 4.1(b) and reborrow under this Section 2.1(a). The Borrowers
shall have the right to terminate or reduce the Commitments at any time and from
time to time, provided that (i) the Borrowers shall give notice of such
termination or reduction to the Agent specifying the amount and effective date
thereof, (ii) each partial reduction of the Commitments shall be in a minimum
amount of $1,000,000 and in integral multiples of $1,000,000 and shall reduce
the Commitments of all of the Banks proportionally in accordance with the
respective Commitment amounts of each such Bank, (iii) no such termination or
reduction, either in whole or part and including without limitation any
termination, shall be permitted with respect to any portion of the Commitments
as to which a request for a Revolving Credit Advances is then pending, and (iv)
the Commitments may not be terminated if any Revolving Credit Advances are then
outstanding and may not be reduced below the principal amount of Revolving
Credit Advances then outstanding, for the benefit of Banks. Notwithstanding
anything in this Agreement to the contrary, the Commitments shall be mandatorily
and automatically reduced to an aggregate amount not to exceed $110,000,000 or
such other greater amount agreed to in writing by the Majority Banks, upon the
issuance or other incurrence of any Subordinated Debt, and such reduction shall
reduce the Commitments of all the Banks proportionally in accordance with the
respected Commitment amounts of each such Bank. The Commitments or any portion
thereof so terminated or reduced may not be reinstated. Any Borrower may request
Revolving Credit Advances without the consent of any other Borrower, and each
Borrower consents to and approves any Revolving Credit Advances requested by any
other Borrower. The Revolving Credit Advances hereunder replace the revolving
credit loans outstanding pursuant to Section 2.1(a) of the Existing Credit
Agreement and provide additional credit as described above.
(b) Each Bank further agrees, for itself only, subject to the terms
and conditions of this Agreement to make its Pro Rata Share of a single term
loan to the Borrowers on the Termination Date, but not at any time thereafter,
in an amount not to exceed the lesser of the amount of the Borrowing Base as of
the Termination Date and the aggregate outstanding principal amount of the
Revolving Credit Advances.
(c) Each Bank further agrees, for itself only, subject to the terms
and conditions of this Agreement, to make its Pro Rata Share of a single bridge
loan to the Borrowers on the Effective Date, but not at any time thereafter, in
an aggregate amount not to exceed $10,000,000. This term loan replaces the
$10,000,000 term loan outstanding under the Existing Credit Agreement and
provides additional credit.
(d) Nothing in this Agreement shall be construed to require or
authorize any Bank to issue any Letter of Credit, it being recognized that the
Agent has the sole obligation under this Agreement to issue Letters of Credit on
behalf of the Banks, and the Commitment of each Bank with respect to Letter of
Credit Advances is expressly conditioned upon the Agent's performance of such
obligations. Upon such issuance by the Agent, each Bank shall automatically
acquire a pro rata risk participation interest in such Letter of Credit Advance
based
CREDIT AGREEMENT Page 15
on its respective Commitment. If the Agent shall honor a draft or other demand
for payment presented or made under any Letter of Credit, the Agent shall
provide notice thereof to each Bank on the date such draft or demand is honored
unless the Borrowers shall have satisfied their reimbursement obligation under
Section 3.3 by payment to the Agent on such date. Each Bank, not later than the
Business Day after the Agent shall have given the notice specified in the
previous sentence, shall make its pro rata share of the amount paid by the Agent
available in immediately available funds at the principal office of the Agent
for the account of the Agent. If and to the extent such Bank shall not have made
any required pro rata portion available to the Agent or made its portion of
Revolving Credit Loan available pursuant to Section 3.3(a)(i), such Bank and the
Borrowers severally agree to pay to the Agent forthwith on demand such amount
together with interest thereon, for each day from the date such amount was paid
by the Agent until such amount is so made available to the Agent at (i) the rate
per annum equal to the interest rate applicable to the related Loan disbursement
under Section 3.3 for such day in the case of the Company and (ii) the rate per
annum equal to the Federal Funds Rate for such day in the case of any Bank. If
such Bank shall pay such amount to the Agent together with such interest, such
amount so paid shall constitute a Revolving Credit Loan by such Bank as part of
the Revolving Credit Loans disbursed in respect of the reimbursement obligation
of the Company under Section 3.3 for purposes of this Agreement. The failure of
any Bank to make its pro rata portion of any such amount paid by the Agent
available to the Agent shall not relieve any other Bank of its obligation to
make available its pro rata portion of such amount, but no Bank shall be
responsible for failure of any other Bank to make such pro rata portion
available to the Agent.
SECTION 3. The Advances.
3.1 Disbursement of Advances. (a) Borrowers shall give notice to the Agent
of each requested Advance in substantially the form of Exhibit E hereto, which
notice given shall be received by the Agent not later than 10:00 a.m. (Chicago
time), (i) three Business Days prior to the date such Loan is requested to be
made if such Loan is to be made as a Eurodollar Loan, (ii) one Business Day
prior to the date such Loan is requested to be made if such Loan is to be made
as a Floating Rate Loan, (iii) three Business Days prior to the date any Letter
of Credit Advance is requested to be made, and (iv) five Business Days prior to
the date the Term Loan is requested to be made. Each such notice given shall be
irrevocable and binding on the Borrowers, any such notice must specify the
Advance Date, which shall be a Business Day, the aggregate amount of such
Advance, the Type of Advance selected, in the case of any Eurodollar Loan, the
Eurodollar Interest Period applicable thereto, and in the case of any Letter of
Credit Advance such other information with respect thereto as may be required by
the Agent. The Agent shall provide notice of such requested Loan to each Bank on
the same Business Day such notice is received from the Borrowers. Subject to the
terms and conditions of this Agreement, the Agent shall, on the date any Letter
of Credit Advance is requested to be made, issue the related Letter of Credit on
behalf of the Banks for the account of the Borrowers, provided that in the case
of each Letter of Credit Advance the Borrowers provide such information as may
be
CREDIT AGREEMENT Page 16
necessary for the issuance thereof by the Agent and execute any document in
connection therewith as may be requested by the Agent. Notwithstanding anything
herein to the contrary, the Agent may decline to issue any requested Letter of
Credit on the basis that the beneficiary, the purpose of issuance or the terms
or conditions of drawing are illegal or contrary to a policy of the Agent.
(b) Floating Rate Loans shall continue as Floating Rate Loans unless
and until such Floating Rate Loans are converted into Eurodollar Loans. Each
Eurodollar Loan of any Type shall continue as a Eurodollar Loan of such Type
until the end of the then applicable Interest Period therefor, at which time
such Eurodollar Loan shall be automatically converted into a Floating Rate Loan
unless the Borrower shall have given the Agent a Conversion/Continuation Notice
requesting that, at the end of such Interest Period, such Eurodollar Loan either
continue as a Eurodollar Loan of such Type for the same or another Interest
Period or be converted into a Loan of another Type. Subject to the terms of
Section 2.1, the Borrower may elect from time to time to convert all or any part
of a Loan of any Type into any other Type or Types of a Loan; provided that any
conversion of any Eurodollar Loan shall be made on, and only on, the last day of
the Interest Period applicable thereto. The Borrowers shall give the Agent
irrevocable notice (a "Conversion/Continuation Notice") of each conversion of a
Loan or continuation of a Eurodollar Loan not later than 10:00 a.m. (Chicago
time) at least one Business Day, in the case of a conversion into a Floating
Rate Loan, or three Business Days, in the case of a conversion into or
continuation of a Eurodollar Loan, prior to the date of the requested conversion
or continuation, specifying:
(i) the requested date which shall be a Business Day, of such conversion
or continuation,
(ii) the aggregate amount and Type of the Loan which is to be converted or
continued, and
(iii)the amount and Type(s) of Loan(s) into which such Loan is to be
converted or continued and, in the case of a conversion into or
continuation of a Eurodollar Loan, the duration of the Interest Period
applicable thereto.
(c) Subject to the terms and conditions of this Agreement, the
proceeds of such requested Loan shall be made available to the Borrowers by
depositing the proceeds thereof, in immediately available funds, on the Advance
Date for such Loan in an account maintained and designated by the Borrowers at
the principal office of the Agent. Each Bank, on the Advance Date of each such
Loan shall make its Pro Rata Share of such Loan available in immediately
available funds at the principal office of the Agent for disbursement to the
Borrowers. Unless the Agent shall have received notice from any Bank prior to
the date of any requested Loan under this Section 3.1 that such Bank will not
make available to the Agent such Bank's Pro Rata Share, the Agent may assume
that such Bank has made such share available to
CREDIT AGREEMENT Page 17
the Agent on the Advance Date of such Loan in accordance with this Section
3.1(b). If and to the extent such Bank shall not have so made such Pro Rata
Share available to the Agent, the Agent may (but shall not be obligated to) make
such amount available to the Borrowers on the relevant Advance Date, and such
Bank agrees to pay to the Agent forthwith on demand such amount together with
interest thereon, for each day from the date such amount is made available to
the Borrowers by the Agent until the date such amount is paid to the Agent, at
the Federal Funds Rate. If such Bank shall pay to the Agent such amount, such
amount so paid shall constitute a Loan by such Bank as a part of such borrowing
for purposes of this Agreement. The failure of any Bank to make its Pro Rata
Share of any such Loan available to the Agent shall not relieve any other Bank
of its obligations to make available its Pro Rata Share of such Loan on the
Advance Date of such Loan, but no Bank shall be responsible for failure of any
other Bank to make such Pro Rata Share available to the Agent on the Advance
Date of any such Loan.
(d) Notwithstanding anything in this Agreement to the contrary, the
Borrowers may not obtain a Eurodollar Loan or convert any Floating Rate Loan to
a Eurodollar Loan if there is any amount outstanding under the Bridge Loan.
(e) Each Bank may book its Loans at any Lending Installation selected
by such Bank and may change its Lending Installation from time to time. All
terms of this Agreement shall apply to any such Lending Installation and the
Notes shall be deemed held by each Bank for the benefit of such Lending
Installation. Each Bank may, by written or telex notice to the Agent and the
Borrowers, designate a Lending Installation through which Loans will be made by
it and for whose account Loan payments are to be made.
3.2 Conditions of Advances. The Banks and the Agent shall not be obligated
to make any Advance hereunder at any time unless:
(a) Prior to or simultaneously with the first Advance hereunder, there
shall have been delivered to each Bank the following documents, in form and
substance satisfactory to the Agent:
(i) The favorable opinion of such counsel for the Borrowers and
each Guarantor, as shall be approved by the Banks, with respect to the matters
as requested by the Banks, including down-dated title opinions on 80% of the
value of the assets acquired by the Borrowers from Black Stone and opinions as
to such other matters as the Banks shall reasonably request, all in form and
substance satisfactory to the Majority Banks;
(ii) certified copies of such corporate documents of each
Borrower and each Guarantor, including each Borrower's and each Guarantor's
articles of incorporation, by-laws and a good standing certificate, and such
documents evidencing necessary corporate action with respect to this Agreement,
the Loans, the Notes and the Security Documents, and certifying to the
incumbency of, and attesting to the genuineness of the
CREDIT AGREEMENT Page 18
signatures of, those officers authorized to act on behalf of each Borrower and
each Guarantor, as the Banks shall request;
(iii) the Security Documents required as of the Effective Date
under Section 5.1 duly executed on behalf of the Borrowers and each Guarantor,
together with evidence of the recordation, filing and other action in such
jurisdictions as the Banks may deem necessary or appropriate with respect to the
Security Documents and evidence of the first-priority of the Banks' liens and
security interests under the Security Documents, subject only to Permitted
Liens, including without limitation such additional mortgages, security
agreements, pledge agreements, other documents and opinions of counsel required
by the Banks and original stock certificates and assignments separate from
certificate of each person whose stock is required to be pledged;
(iv) the Notes duly executed on behalf of the Borrowers, and it
is acknowledged and agreed that the Notes: (A) are issued in exchange and
replacement for the promissory notes issued pursuant to the Existing Credit
Agreement, (B) shall not be deemed a novation or to have satisfied such
promissory notes and (C) evidence the same indebtedness evidenced by such
promissory notes plus additional indebtedness;
(v) the Consent and Amendment of Security Documents duly executed
by the Borrowers and the Guarantors;
(vi) Payment of such fees agreed to among the Borrowers and the
Agent;
(vii) the execution by the Borrowers and each Guarantor of the
Agent's standard environmental certificate;
(viii) the Banks shall have determined that the Loans to be made
are equal to or less than the Borrowing Base, and such determination shall be
made by the Banks in their sole discretion and based upon their evaluation of
the Borrowing Base;
(ix) copies of all agreements relating to any material
Indebtedness for borrowed money, any preferred stock, any joint ventures or
partnerships or any other material documents requested by the Banks;
(x) the originals of all promissory notes payable to any Borrower
or any Guarantor, other than promissory notes in an aggregate amount less than
$50,000;
(xi) such other agreements, documents, conditions and
certificates as reasonably requested by the Banks, including without limitation,
releases and terminations of all other Liens which are not permitted hereunder,
assignment of the Purchase
CREDIT AGREEMENT Page 19
Documents, amendments of existing Security Documents, the establishment of all
primary bank accounts of each Borrower and each Guarantor at a Bank (and each
agrees to maintain such accounts at a Bank), all in form and substance
satisfaction to the Banks;
(xii) certified copies of all purchase agreements, purchase and
sale agreements and all other agreements and documents executed or to be
executed and delivered in connection with the acquisition by CRI of certain oil
and gas properties and other assets from Black Stone and certain working
interest owners; and
(xiii) evidence satisfactory to the Majority Banks that, but for
the payment of a portion of the purchase price to be paid by the initial Loans
under this Agreement, the representations and warranties in the last sentence of
Section 6.12 are accurate.
(b) The aggregate outstanding principal amount of all Revolving Credit
Loans or the Term Loan, whichever is outstanding, after giving effect to the
proposed Loan, does not exceed the lesser of the Commitments or the Borrowing
Base, and the aggregate outstanding principal amount of all Letter of Credit
Advances, after giving effect to the proposed Letter of Credit Advance, does not
exceed the lesser of $1,000,000 or the CNG/CRI Guaranteed Formula.
(c) On and as of the date of each such Advance, the representations
and warranties contained in Section 6 hereof shall be true and correct in all
material respects as if made on such date; provided, however, that for purposes
of this Section 3.2(c) the representations and warranties contained in Section
6.7 hereof shall be deemed made with respect to both the financial statements
referred to therein and the most recent financial statements delivered pursuant
to Section 7.1(d)(ii) and (iii).
(d) No Default or event or condition which could cause a Material
Adverse Effect has occurred and is continuing or will exist upon the
disbursement of such Advance.
Acceptance of the proceeds of any Advance hereunder by the Borrowers shall be
deemed to be a certification by the Borrowers at such time with respect to the
matters set forth in subparagraphs (b), (c) and (d) of this Section 3.2.
3.3 Letter of Credit Reimbursement Payments. (a)(i) The Borrowers agree to
pay to the Agent, on the day on which the Agent shall honor a draft or other
demand for payment presented or made under any Letter of Credit, an amount equal
to the amount paid by the Agent in respect of such draft or other demand under
such Letter of Credit and all expenses paid or incurred by the Agent relative
thereto. Unless the Borrowers shall have made such payment to the Agent on such
day, upon each such payment by the Agent, the Agent shall be deemed to have
disbursed to the Borrowers, and the Borrowers shall be deemed to have elected to
satisfy its reimbursement obligation by borrowing, a Revolving Credit Loan for
the account
CREDIT AGREEMENT Page 20
of the Banks in an amount equal to the amount so paid by the Agent in respect of
such draft or other demand under such Letter of Credit. Such Revolving Credit
Loan shall be disbursed, and each Bank shall advance its Pro Rata Share thereof,
notwithstanding any failure to satisfy any conditions for disbursement of any
Loan set forth in Section 3.2 or any other condition and, to the extent of the
Revolving Credit Loan so disbursed, the reimbursement obligation of the
Borrowers under this Section 3.3 shall be deemed satisfied; provided, however,
that such disbursement shall not be deemed to be a waiver of any Event of
Default or Default, if any.
(ii) If for any reason (including without limitation as a result
of the occurrence of an Event of Default with respect to the Borrowers or any of
its Subsidiaries pursuant to Section 8.1(g), Revolving Credit Loans may not be
made by the Banks as described in Section 3.3(a)(i), then (A) the Borrowers
agree that each reimbursement amount not paid pursuant to the first sentence of
Section 3.3(a)(i) shall bear interest, payable on demand by the Agent, at the
interest rate then applicable to Revolving Credit Loans, and (B) effective on
the date each such Revolving Credit Loan would otherwise have been made, each
Bank severally agrees that it shall unconditionally and irrevocably, without
regard to the occurrence of any Default or Event of Default, in lieu of a deemed
disbursement of Revolving Credit Loans, to the extent of such Bank's Pro Rata
Share, purchase a participating interest in each reimbursement amount. Each Bank
will immediately transfer to the Agent, in same day funds, the amount of its
participation. Each Bank shall share on a pro rata basis (calculated by
reference to the Bank Commitments) in any interest which accrues thereon and in
all repayments thereof. If and to the extent that any Bank shall not have so
made the amount of such participating interest available to the Agent, such Bank
and the Borrowers agree to pay to the Agent forthwith on demand such amount
together with interest thereon, for each day from the date of demand by the
Agent until the date such amount is paid to the Agent, at (x) in the case of the
Borrowers, the interest rate then applicable to Loans and (y) in the case of
such Bank, the Federal Funds Rate.
(b) The reimbursement obligations of the Borrowers under this Section
3.3 shall be absolute, unconditional and irrevocable and shall remain in full
force and effect until all obligations of the Borrowers to the Agent and the
Banks hereunder shall have been satisfied, and such obligations of the Borrowers
shall not be affected, modified or impaired upon the happening of any event,
including without limitation, any of the following, whether or not with notice
to, or the consent of, the Borrowers:
(i) Any lack of validity or enforceability of any Letter of
Credit or any documentation relating to any Letter of Credit or to any
transaction related in any way to such Letter of Credit (the "Letter of Credit
Documents");
(ii) Any amendment, modification, waiver or consent, or any
substitution, exchange or release of or failure to perfect any interest in
collateral or security, with respect to any of the Letter of Credit Documents;
CREDIT AGREEMENT Page 21
(iii) The existence of any claim, setoff, defense or other right
which the Borrowers may have at any time against any beneficiary or any
transferee of any Letter of Credit (or any persons or entities for whom any such
beneficiary or any such transferee may be acting) , the Agent or any Bank or any
other person or entity, whether in connection with any of the Letter of Credit
Documents, the transactions contemplated herein or therein or any unrelated
transactions;
(iv) Any draft or other statement or document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;
(v) Payment by the Agent to the beneficiary under any Letter of
Credit against presentation of documents which do not comply with the terms of
the Letter of Credit, including failure of any documents to bear any reference
or adequate reference to such Letter of Credit;
(vi) Any failure, omission, delay or lack on the part of the
Agent or any Bank or any party to any of the Letter of Credit Documents to
enforce, assert or exercise any right, power or remedy conferred upon the Agent,
any Bank or any such party under this Agreement or any of the Letter of Credit
Documents, or any other acts or omissions on the part of the Agent, any Bank or
any such party; or
(vii) Any other event or circumstance that would, in the absence
of this clause, result in the release or discharge by operation of law or
otherwise of the Borrowers from the performance or observance of any obligation,
covenant or agreement contained in this Section 3.3.
No setoff, counterclaim, reduction or diminution of any obligation or any
defense of any kind or nature which the Borrowers has or may have against the
beneficiary of any Letter of Credit shall be available hereunder to the
Borrowers against the Agent or any Bank. Nothing in this Section 3.3 shall limit
the liability, if any, of the Banks to the Borrowers pursuant to Section
10.5(c).
(c) For purposes of this Agreement, a Letter of Credit Advance (i)
shall be deemed outstanding in an amount equal to the sum of the maximum amount
available to be drawn under the related Letter of Credit on or after the date of
determination and on or before the stated expiry date thereof plus the amount of
any draws under such Letter of Credit that have not been reimbursed as provided
in this Section 3.3 and (ii) shall be deemed outstanding at all times on and
before such stated expiry date or such earlier date on which all amounts
available to be drawn under such Letter of Credit have been fully drawn, and
thereafter until all related reimbursement obligations have been paid pursuant
to Section 3.3. As provided in this Section 3.3, upon each payment made by the
Agent in respect of any draft or other demand for payment under any Letter of
Credit, the amount of any Letter of Credit Advance
CREDIT AGREEMENT Page 22
outstanding immediately prior to such payment shall be automatically reduced by
the amount of each Revolving Credit Loan deemed advanced in respect of the
related reimbursement obligation of the Borrowers.
(d) Each Bank's obligation to purchase participating interests
pursuant to Section 2.1(c) and this Section 3.3, and to comply with the terms of
Section 2.1(c) and this Section 3.3, shall be absolute and unconditional and
shall not be affected by any circumstance, including, without limitation, (i)
any set-off, counterclaim, recoupment, defense or other right which such Bank or
the Borrowers may have against the Agent, the Borrowers or anyone else for any
reason whatsoever; (ii) the occurrence or continuance of a Default or an Event
of Default; (iii) any adverse change in the condition (financial or otherwise)
of the Borrowers; (iv) any breach of this Agreement by the Borrowers or any
other Bank; or (v) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing.
3.4. Withholding Tax Exemption. At least five Business Days prior to the
first date on which interest or fees are payable hereunder for the account of
any Bank, each Bank that is not incorporated under the laws of the United States
of America, or a state thereof, agrees that it will deliver to each of the
Borrowers and the Agent two duly completed copies of United States Internal
Revenue Service Form 1001 or 4224, certifying in either case that such Bank is
entitled to receive payments under this Agreement and the Notes without
deduction or withholding of any United States federal income taxes. Each Bank
which so delivers a Form 1001 or 4224 further undertakes to deliver to each of
the Borrowers and the Agent two additional copies of such form (or a successor
form) on or before the date that such form expires (currently, three successive
calendar years for Form 1001 and one calendar year for Form 4224) or becomes
obsolete or after the occurrence of any event requiring a change in the most
recent forms so delivered by it, and such amendments thereto or extensions or
renewals thereof as may be reasonably requested by the Borrowers or the Agent,
in each case certifying that such Bank is entitled to receive payments under
this Agreement and the Notes without deduction or withholding of any United
States federal income taxes, unless an event (including without limitation any
change in treaty, law or regulation) has occurred prior to the date on which any
such delivery would otherwise be required which renders all such forms
inapplicable or which would prevent such Bank from duly completing and
delivering any such form with respect to it and such Bank advises the Borrowers
and the Agent that it is not capable of receiving payments without any deduction
or withholding of United States federal income tax.
CREDIT AGREEMENT Page 23
SECTION 4. Payment and Prepayment; Fees; Change in Circumstances.
4.1 Principal Payments.
(a) Unless earlier payment is required under this Agreement, the
Borrowers shall pay (i) the entire outstanding principal amount of the Revolving
Credit Advances on the Termination Date, (ii) the Term Loan in consecutive
quarterly installments each in an amount equal to 5% of the original outstanding
principal amount of the Term Loan, commencing with the date three months after
the Termination Date and each three months thereafter until the Maturity Date of
the Term Loan and shall pay the entire remaining outstanding principal amount of
the Term Loan on the Maturity Date - Term Loan and (iii) the entire outstanding
principal amount of the Bridge Loan on the Maturity Date - Bridge Loan.
(b) The Borrowers may from time to time prepay all or a portion of the
Advances without premium or penalty, provided, however, that (i) the Borrowers
shall have given not less than one Business Day's prior written notice thereof
to the Agent, (ii) other than mandatory payments, each such prepayment, in the
case of prepayment of Floating Rate Loans, shall be in the minimum amount of
$500,000 and in integral multiples of $100,000 and, in the case of prepayment of
Eurodollar Loans, shall be in the minimum amount of $1,000,000 and in increment
integral multiples thereof, (iii) any prepayment of any Eurodollar Loan shall be
accompanied by any amount required pursuant to Section 4.10.
(c) If it should be determined by the Agent at any time and from time
to time that the principal amount of the Revolving Credit Advances or the Term
Loan, whichever is outstanding, exceeds the lesser of the then Borrowing Base or
the Commitments, the Borrowers shall promptly do one of the following:
(i) In addition to all other payments of principal and interest
required to be paid on the Revolving Credit Advances and the Term Loan,
whichever is outstanding, prepay, upon demand and without premium or penalty,
the Revolving Credit Notes or the Term Notes, whichever are outstanding, in an
amount by which, in the determination of the Agent, such aggregate principal
amount outstanding exceeds the lesser of the then Borrowing Base or the
Commitments; or
(ii) Grant a lien and security interest to the Agent, for the
benefit of the Banks, in form and substance satisfactory to the Majority Banks,
additional interests in Proved Developed Reserves of the Borrowers which, in the
determination of the Majority Banks, will increase the Borrowing Base by an
amount such that the then aggregate principal amount of the Revolving Credit
Advances does not exceed the lesser of the then Borrowing Base or the
Commitments; or
(iii) Any combination of the foregoing acceptable to the Majority
Banks.
CREDIT AGREEMENT Page 24
(d) In addition to all other payments required hereunder, if CRI shall
at any time issue or otherwise incur any Subordinated Debt, the Borrowers shall
prepay the Advances by an amount equal to 100% of the net proceeds (net only of
reasonable and customary fees and costs of the issuance of such Subordinated
Debt) of such Subordinated Debt, payable upon receipt of such proceeds, provided
that the amount of such proceeds shall be first applied to the Bridge Loan until
paid in full, and thereafter applied to the other outstanding Advances.
(e) In addition to all other payments of the Bridge Loan required
hereunder, upon any sale or other disposition of any assets the Borrowers shall
prepay the Bridge Loan by an amount equal to 100% of the net proceeds (net only
of reasonable and customary costs of such sale or other disposition) of such
sale or disposition which prepayment is due upon receipt of such net proceeds.
All determinations made pursuant to this Section 4.1 shall be
made by the Agent or the Majority Banks, as the case may be, and shall be
conclusively binding on the parties absent manifest error.
4.2 Interest Payment. (a) The Borrowers shall pay interest to the Banks on
the unpaid principal amount of each Revolving Credit Loan and the Term Loan for
the period commencing on the date such Loan is made until such Loan is paid in
full, on each Interest Payment Date and at maturity (whether at stated maturity,
by acceleration or otherwise), and thereafter on demand, at the following rates
per annum: (i) during such periods that such Loan is a Floating Rate Loan, the
Floating Rate, and (ii) during such periods that such Loan is a Eurodollar Loan,
the Eurodollar Rate applicable to such Loan for each related Eurodollar Interest
Period.
(b) The Borrowers shall pay interest to the Banks on the unpaid
principal amount of the Bridge Loan, for the period commencing on the date such
Bridge Loan is made until the Bridge Loan is paid in full, and at maturity
(whether at stated maturity, by acceleration or otherwise), and thereafter on
demand, at the Floating Rate.
(c) Notwithstanding the foregoing paragraphs (a) and (b), the
Borrowers hereby agree, if requested by the Majority Banks, to pay interest on
demand at the Overdue Rate on the outstanding principal amount of any Loan and
any other amount payable by the Borrowers hereunder (other than interest) upon
and during the continuance of any Default.
4.3 Fees. (a) The Borrowers agree to pay to the Agent, for the pro rata
account of the Banks, a commitment fee computed at the per annum rate equal to
the Applicable Margin on the amount by which the Commitments exceed the
aggregate outstanding principal amount of the Revolving Credit Loans, for the
period from the Effective Date until the Termination Date, which fees shall be
paid quarterly, on the last day of each March, June,
CREDIT AGREEMENT Page 25
September and December commencing on the first such date after the Effective
Date, and on the Termination Date.
(b) The Borrowers agree (i) to pay to the Agent, for the benefit of
the Banks, a fee equal to 1-1/2% per annum of the maximum amount available to be
drawn under each Letter of Credit at the time such fee is to be paid for the
period from and including the date of issuance of such Letter of Credit to and
including the stated expiry date of such Letter of Credit, provided that the
amount payable for any quarter under this clause (i) shall be not less than
$500, and (ii) to pay an additional fee to the Agent for its own account
computed at the rate of one-quarter of one percent (1/4 of 1%) per annum of such
maximum amount for such period. Such fees shall be payable quarterly in advance,
payable on the date of the issuance of any Letter of Credit and each three month
interval thereafter. Such fees are nonrefundable and the Borrowers shall not be
entitled to any rebate of any portion thereof if such Letter of Credit does not
remain outstanding through the date for which such fees have been paid. The
Borrowers further agree to pay to the Agent, on demand, such other customary
administrative fees, charges and expenses of the Agent in respect of the
issuance, negotiation, acceptance, amendment, transfer and payment of each
Letter of Credit or otherwise payable pursuant to the application and related
documentation under which such Letter of Credit is issued.
(c) The Borrowers agree to pay to the Agent agency and servicing fees
for its services under this Agreement in such amounts as it may from time to
time be agreed upon between the Borrowers and the Agent, which fee shall be
retained solely by the Agent.
4.4 Payment Method. All payments to be made by the Borrowers hereunder will
be made in Dollars and in immediately available funds to the Agent at its
address set forth in Section 10.2 not later than 11:00 a.m. Chicago time on the
date on which such payment shall become due. Payments received after 11:00 a.m.
Chicago time shall be deemed to be payments made prior to 11:00 a.m. Chicago
time on the next succeeding Business Day. At the time of making each such
payment, the Borrowers shall specify to the Agent that obligation of the
Borrowers hereunder to which such payment is to be applied, or, in the event
that the Borrowers fails to so specify or if an Event of Default shall have
occurred and be continuing, the Agent may apply such payments as it may
determine in its sole discretion. On the day such payments are received, the
Agent shall remit to the Banks their respective Pro Rata Shares of such
payments, in immediately available funds.
4.5 No Setoff or Deduction. All payments of principal of and interest on
the Advances and other amounts payable by the Borrowers hereunder shall be made
by the Borrowers without setoff or counterclaim, and free and clear of, and
without deduction or withholding for, or on account of, any present or future
taxes, levies, imposts, duties, fees, assessments, or other charges of whatever
nature, imposed by any governmental authority, or by any department, agency or
other political subdivision or taxing authority.
CREDIT AGREEMENT Page 26
4.6 Payment on Non-Business Day; Payment Computations. Except as otherwise
provided in this Agreement to the contrary, whenever any installment of
principal of, or interest on, any Advances outstanding hereunder or any other
amount due hereunder, becomes due and payable on a day which is not a Business
Day, the maturity thereof shall be extended to the next succeeding Business Day
and, in the case of any installment of principal, interest shall be payable
thereon at the rate per annum determined in accordance with this Agreement
during such extension. Computations of interest and other amounts due under this
Agreement shall be made on the basis of a year of 360 days for the actual number
of days elapsed, including the first day but excluding the last day of the
relevant period.
4.7. Yield Protection. If any law or any governmental or quasi-governmental
rule, regulation, policy, guideline or directive (whether or not having the
force of law), or any interpretation thereof, or the compliance of any Bank
therewith,
(i) subjects any Bank or any applicable Lending Installation to any tax,
duty, charge or withholding on or from payments due from the Borrowers
(excluding federal taxation of the overall net income of any Bank or
applicable Lending Installation), or changes the basis of taxation of
payments to any Bank in respect of its Loans or other amounts due it
hereunder, or
(ii) imposes or increases or deems applicable any reserve, assessment,
insurance charge, special deposit or similar requirement against
assets of, deposits with or for the account of, or credit extended by,
any Bank or any applicable Lending Installation (other than reserves
and assessments taken into account in determining the interest rate
applicable to Eurodollar Loans), or
(iii)imposes any other condition the result of which is to increase the
cost to any Bank or any applicable Lending Installation of making,
funding or maintaining loans or reduces any amount receivable by any
Bank or any applicable Lending Installation in connection with loans,
or requires any Bank or any applicable Lending Installation to make
any payment calculated by reference to the amount of loans held or
interest received by it, by an amount deemed material by such Bank,
then, within 30 days of demand by such Bank, the Borrowers shall pay such Bank
that portion of such increased expense incurred or reduction in an amount
received which such Bank determines is attributable to making, funding and
maintaining its Loans and its Commitment.
4.8. Changes in Capital Adequacy Regulations. If a Bank determines the
amount of capital required or expected to be maintained by such Bank, any
Lending Installation of such Bank or any corporation controlling such Bank is
increased as a result of a Change,
CREDIT AGREEMENT Page 27
then, within 15 days of demand by such Bank, the Borrowers shall pay such Bank
the amount necessary to compensate for any shortfall in the rate of return on
the portion of such increased capital which such Bank determines is attributable
to this Agreement, its Loans or its obligation to make Loans hereunder (after
taking into account such Bank's policies as to capital adequacy). "Change" means
(i) any change after the date of this Agreement in the Risk-Based Capital
Guidelines or (ii) any adoption of or change in any other law, governmental or
quasi-governmental rule, regulation, policy, guideline, interpretation, or
directive (whether or not having the force of law) after the date of this
Agreement which affects the amount of capital required or expected to be
maintained by any Bank or any Lending Installation or any corporation
controlling any Bank. "Risk-Based Capital Guidelines" means (i) the risk-based
capital guidelines in effect in the United States on the date of this Agreement,
including transition rules, and (ii) the corresponding capital regulations
promulgated by regulatory authorities outside the United States implementing the
July 1988 report of the Basle Committee on Banking Regulation and Supervisory
Practices Entitled "International Convergence of Capital Measurements and
Capital Standards," including transition rules, and any amendments to such
regulations adopted prior to the date of this Agreement.
4.9. Availability of Types of Advances. If any Bank determines that
maintenance of its Eurodollar Loans at a suitable Lending Installation would
violate any applicable law, rule, regulation, or directive, whether or not
having the force of law, or if the Majority Banks determine that (i) deposits of
a type and maturity appropriate to match fund Eurodollar Loans are not available
or (ii) the interest rate applicable to a Type of Advance does not accurately
reflect the cost of making or maintaining such Advance, then the Agent shall
suspend the availability of the affected Type of Advance and require any
Eurodollar Loans of the affected Type to be repaid.
4.10. Funding Indemnification. If any payment of a Eurodollar Loan occurs
on a date which is not the last day of the applicable Interest Period, whether
because of acceleration, prepayment or otherwise, or a Eurodollar Loan is not
made on the date specified by the Borrowers for any reason other than default by
the Banks, the Borrowers will indemnify each Bank for any loss or cost incurred
by it resulting therefrom, including, without limitation, any loss or cost in
liquidating or employing deposits acquired to fund or maintain the Eurodollar
Loan.
4.11. Bank Statements; Survival of Indemnity. To the extent reasonably
possible, each Bank shall designate an alternate Lending Installation with
respect to its Eurodollar Loans to reduce any liability of the Borrowers to such
Bank under Sections 4.7 and 4.8 or to avoid the unavailability of a Type of
Advance under Section 3.3, so long as such designation is not disadvantageous to
such Bank. Each Bank shall deliver a written statement of such Bank to the
Borrowers (with a copy to the Agent) as to the amount due, if any, under
Sections 4.7, 4.8 or 4.10. Such written statement shall set forth in reasonable
detail the calculations upon which such Bank determined such amount and shall be
final, conclusive and binding on the Borrowers in the absence of manifest error.
Determination of amounts payable under such Sections in
CREDIT AGREEMENT Page 28
connection with a Eurodollar Loan shall be calculated as though each Bank funded
its Eurodollar Loan through the purchase of a deposit of the type and maturity
corresponding to the deposit used as a reference in determining the Eurodollar
Rate applicable to such Loan, whether in fact that is the case or not. Unless
otherwise provided herein, the amount specified in the written statement of any
Bank shall be payable on demand after receipt by the Borrowers of such written
statement. The obligations of the Borrowers under Sections 4.7, 4.8 and 4.10
shall survive payment of the Bank Obligations and termination of this Agreement.
SECTION 5. Security.
5.1 Security Documents. To secure amounts due under this Agreement, the
Notes, and to secure all other Indebtedness and obligations of the Borrowers to
the Agent and the Banks, whether direct or indirect, absolute or contingent, due
or to become due, now existing or hereafter arising, the Borrowers shall, and
shall cause each Guarantor to:
(a) Execute and deliver to the Agent, on or before the Effective Date,
such indentures of mortgage, deeds of trust, security agreements, financing
statements and assignment of production and other agreements, including without
limitation any amendments to any such documents previously executed and
delivered in favor of the Agent or any Bank (as amended or modified from time to
time, the "Mortgages" and together with the Security Agreements, the Guaranties
and all agreements and documents described in this Section 5.1(a) and in 5.1(b),
5.2 and 5.3 and all other agreements and documents securing or guaranteeing any
of the Bank obligations at any time or otherwise executed by any Borrower or
Guarantor with or in favor of the Agent and the Banks, and including without
limitation the Letter of Credit Documents, as amended or modified from time to
time, the "Security Documents"), in form and substance satisfactory to the
Majority Banks, granting the Agent, for the benefit of the Banks, a
first-priority, perfected and enforceable lien and security interest, subject
only to the Permitted Liens, in the following (collectively, with all other
assets described in Section 5.1(b), the "Collateral"): all oil, gas and mineral
properties and all other assets of the Borrowers and each Guarantor, including
without limitation all leasehold and royalty interests and all other rights in
connection therewith, and all interests in machinery, equipment, materials,
improvements, hereditaments, appurtenances and other property, real, personal
and/or mixed, now or hereafter a part of or obtained in or used in connection
with such properties and all interests in and to any and all oil, gas and other
minerals now in storage or now or hereafter located in, under, on or produced
from, such properties and an assignment of production from such properties to
the Agent;
(b) Execute and deliver to the Agent, on or before the Effective Date,
such security agreements, pledge agreement, financing statements and other
agreements, including without limitation the Consent and Amendment of Security
Documents confirming the continuing effectiveness of previously executed and
delivered to the Agent or any Bank (as amended or modified from time to time,
the "Security Agreements"), in form and substance
CREDIT AGREEMENT Page 29
satisfactory to the Majority Banks, granting to the Agent, for the benefit of
the Banks, a first- priority, perfected and enforceable lien and security
interest, subject only to the Permitted Liens, in all other assets, whether
real, personal or mixed, and whether now owned or hereafter existing and
wherever located, of the Borrowers and each Guarantor; provided, however, that
the Borrowers and the Guarantors shall not be required to grant a lien on, or
security interest in, the assets described on Schedule 5.1 for so long as they
are contractually prohibited from doing so, and each of the Borrowers and each
of the Guarantors represent that they are contractually prohibited from granting
liens on, or security interest in, the assets described on Schedule 5.1 and
agree not to enter into any further restrictions with respect thereto.
5.2 Guaranty. To confirm its guarantee of all indebtedness, obligations and
liabilities of the Borrowers owing to the Banks, whether under this Agreement or
otherwise, the Borrowers shall cause each Guarantor to deliver the Consent and
Amendment of Security Documents confirming the continuing effectiveness of the
guaranty agreements previously executed by each Guarantor (the "Guaranties") in
favor of the Agent or Banks, in form and substance satisfactory to the Majority
Banks.
5.3 Additional Security Documents. If at any time requested by the Agent or
the Majority Banks, the Borrowers shall, and shall cause each Guarantor to,
execute and deliver such additional documents, and shall take such other action,
as the Agent or the Majority Banks may reasonably consider necessary or proper
to evidence or perfect the liens and security interests described in Section 5.1
hereof and grant the guaranties described in Section 5.2. Immediately after the
acquisition is completed pursuant to the Purchase Documents, the Borrowers agree
that they shall cause Black Stone to execute a Guaranty and all Security
Documents in order to grant a lien and security interest in all assets of Black
Stone, and COG shall execute such documents to grant a first lien and security
interest on all capital stock of Black Stone, together with delivery to the
Agent of the original of all stock certificates pledged thereby and other
documents in connection therewith requested by the Agent, including without
limitation all board resolutions, officer certificates and legal opinions.
SECTION 6. Representations and Warranties.
Each of the Borrowers and each of the Guarantors represent and warrant
that:
6.1 Corporate Existence and Power. It is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, and is duly qualified to do business and in good standing in each
additional jurisdiction where failure to so qualify would have a Material
Adverse Effect. It has all requisite corporate power to own its properties and
to carry on its business as now being conducted and as proposed to be conducted,
and to execute and deliver this Agreement, the Notes and the Security Documents
and to engage in the transactions contemplated by this Agreement, the Notes and
the Security Documents.
CREDIT AGREEMENT Page 30
6.2 Corporate Authority. The execution, delivery and performance by it of
this Agreement, the Notes and the Security Documents are within its corporate
powers, have been duly authorized by all necessary corporate action and are not
in contravention of any law, rule or regulation, or any judgment, decree, writ,
injunction, order or award of any arbitrator, court or governmental authority,
or of the terms of its charter or by-laws, or of any contract or undertaking to
which it is a party or by which it or its property may be bound or affected.
6.3 Binding Effect. This Agreement is, and the Notes and the Security
Documents to which it is a party when delivered hereunder will be, legal, valid
and binding obligations of each Borrower and each Guarantor, enforceable against
each in accordance with their respective terms.
6.4 Subsidiaries. All Subsidiaries of CRI are duly organized, validly
existing and in good standing under the laws of their jurisdictions of
incorporation and are duly qualified to do business in each jurisdiction where
failure to so qualify would have a Material Adverse Effect. All outstanding
shares of capital stock of each class of each Subsidiary of CRI have been and
will be validly issued and are and will be fully paid and nonassessable and are
and will be owned, beneficially and of record, by CRI, free and clear of any
Liens. Schedule 6.4 is a complete list of all Subsidiaries of CRI. Each of COG,
COE, CMC (provided that notwithstanding anything herein to the contrary it is
acknowledged and agreed that CMC may be dissolved or liquidated if all of its
assets are transferred to a Borrower) and CNG is and will remain a wholly-owned
Subsidiary of CRI, COGL is and will remain a wholly-owned Subsidiary of COG,
after completion of the acquisition of the Purchase Documents, Black Stone will
be wholly-owned subsidiary of COG and will remain a wholly-owned subsidiary of
COG, and CPI is and, without the prior written consent of the Agent, will remain
a wholly-owned Subsidiary of CNG.
6.5 Liens. The properties of each Borrower and each Guarantor (including
without limitation the Collateral) are not subject to any Lien except Permitted
Liens.
6.6 Litigation. There is no action, suit or proceeding pending or, to the
best of its knowledge, threatened against or affecting it before or by any
court, governmental authority, or arbitrator which would be reasonably likely to
result in, either individually or collectively, a Material Adverse Effect and,
to the best of the Borrowers' knowledge, there is no basis for any such action,
suit or proceeding.
6.7 Financial Condition. The consolidated balance sheet of CRI and its
Subsidiaries and the consolidated statements of income and cash flow of CRI and
its Subsidiaries for the fiscal year ended December 31, 1995 and reported on by
Arthur Andersen, LLP, copies of which have been furnished to the Bank, fairly
present, and the financial statements of CRI and its Subsidiaries to be
delivered pursuant to Section 7.1(d) will fairly present, the consolidated
financial position of CRI and its Subsidiaries and is at their respective dates
thereof, and the consolidated results of operations of CRI and its Subsidiaries
for their respective periods
CREDIT AGREEMENT Page 31
indicated, all in accordance with generally accepted accounting principles
consistently applied. There has been no event or development which has had or
would be reasonably likely to have a Material Adverse Effect since December 31,
1995. There is no material Contingent Liability of CRI or any of its
Subsidiaries that is not reflected in such financial statements or in the notes
thereto.
6.8 Use of Advance. Neither any Borrower nor any Guarantor extends or
maintains, in the ordinary course of business, credit for the purpose, whether
immediate, incidental, or ultimate, of buying or carrying margin stock (within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System), and no part of the proceeds of each Advance will be used for the
purpose, whether immediate, incidental, or ultimate, of buying or carrying any
such margin stock or maintaining or extending credit to others for such purpose.
After applying the proceeds of the Advances, such margin stock will not
constitute more than 25% of the value of the assets that are subject to any
provisions of this Agreement or any Security Document that may cause the
Advances to be secured, directly or indirectly by margin stock.
6.9 Security Documents. The Security Documents create a valid and
enforceable first-priority lien on and perfected security interest in all right,
title and interest of each Borrower and each Guarantor in and to the Collateral
described therein, securing all amounts intended to be secured thereby
(including without limitation all principal of and interest on the Notes)
subject only to the Permitted Liens. The respective net revenue interests of
each Borrower in and to the Oil and Gas Interests as set forth in the Security
Documents are true and correct and accurately reflect the interests to which
each Borrower is legally entitled, subject only to the Permitted Liens.
6.10 Consents, Etc. No consent, approval or authorization of or
declaration, registration or filing with any governmental authority or any
nongovernmental person or entity, including without limitation any creditor or
stockholder of it, is required on the part of it in connection with the
execution, delivery and performance of this Agreement, the Notes, the Security
Documents or the transactions contemplated hereby or as a condition to the
legality, validity or enforceability of this Agreement, the Notes or any of the
Security Documents.
6.11 Taxes. It has filed all tax returns (federal, state and local)
required to be filed and has paid all taxes shown thereon to be due, including
interest and penalties, or has established adequate financial reserves on their
respective books and records for payment thereof, except where the failure to do
so would not have a Material Adverse Effect.
6.12 Title to Properties. It has good and defensible title to, and a valid
indefeasible ownership interest in, all of its properties and assets (including,
without limitation, the Collateral subject to the Security Documents) free and
clear of any Lien except the Permitted Liens, and it is the owner of all the
Collateral described in the Security Documents to which it is a party. All wells
on any of the mortgaged premises have been drilled, operated, shut-in,
CREDIT AGREEMENT Page 32
abandoned or suspended in accordance with good oil and gas field practices and
in compliance with all applicable laws, permits, statutes, orders, licenses,
rules and regulations. All leases with respect to any Oil and Gas Interests
owned by the Borrowers or any Guarantor are in good standing and are in full
force and effect, all royalties, rents, taxes, assessments and other payments
thereunder or with respect thereto have been properly and timely paid and all
conditions necessary to keep such leases in full force have been fully
performed, including without limitation any condition to maintain continuous
production or other activity with respect thereto. All transactions contemplated
pursuant to the Purchase Documents have been completed, including without
limitation the acquisition by COG of the Purchased Black Stone Assets and have
been completed in accordance with all applicable laws and regulations and COG
owns the Purchased Black Stone Assets free and clear of all Liens other than the
first priority, perfected and enforceable lien and security interest in favor of
the Agent for the benefit of the Banks.
6.13 ERISA. CRI and its Subsidiaries and their Plans are in compliance in
all material respects with those provisions of ERISA and of the Code which are
applicable with respect to any Plan. No prohibited transaction (as defined in
Section 406 of ERISA and Section 9975 of the Code) and no reportable event (as
defined in ERISA) has occurred with respect to any Plan. Neither CRI, any of its
Subsidiaries nor any of its ERISA Affiliates is an employer with respect to any
multiemployer plan (as defined in Section 4001(a)(3) of ERISA). CRI, its
Subsidiaries and the ERISA Affiliates have met the minimum funding requirements
under ERISA and the Code with respect to each of the respective Plans, if any,
and have not incurred any liability to the PBGC or any Plan. There is no
unfunded benefit liability with respect to any Plan.
6.14 Environmental and Safety Matters. It is in compliance in all material
respects with all federal, state and local laws, ordinances and regulations
relating to safety and industrial hygiene or to the environmental condition,
including without limitation all Environmental Laws in jurisdictions in which it
owns any interest in or operates, a well, a facility or site, or arranges for
disposal or treatment of hazardous substances, solid waste, or other wastes,
accepts for transporting any hazardous substances, solid waste, or other wastes,
or holds any interest in real property or otherwise, except where any such
noncompliance would not have a Material Adverse Effect. No demand, claim,
notice, suit, suit in equity, action, administrative action, investigation or
inquiry whether brought by any governmental authority, private person or entity
or otherwise, arising under, relating to or in connection with any Environmental
Laws is pending or its best of any Borrower's knowledge threatened against it,
any real property in which it holds or has held an interest or any past or
present operation of it. It (a) does not know of any federal or state
investigation evaluating whether any remedial action is needed to respond to a
release of any toxic substances, radioactive materials, hazardous wastes or
related materials into the environment, (b) has not received any notice of any
toxic substances, radioactive materials, hazardous waste or related materials
in, or upon any of its properties in violation of any Environmental Laws, and
(c) does not know of any basis for any such investigation, notice or violation.
No material release, threatened release or disposal of
CREDIT AGREEMENT Page 33
hazardous waste, solid waste or other wastes is occurring or has occurred on,
under or to any real property in which it holds any interest or performs any of
its operations, in violation of any Environmental Law which would have a
Material Adverse Effect.
6.15 Direct Benefit. The initial Advances hereunder and all additional
Advances are for the direct benefit of each of the Borrowers and the Guarantors,
and the initial Advances hereunder are used to acquire the Purchased Black Stone
Assets and to refinance and replace indebtedness owing, directly or indirectly,
by the Borrowers and the Guarantor to the Banks under the Existing Credit
Agreement. The Borrowers and the Guarantors are engaged as an integrated group
in the business of oil and gas exploration and related fields, and any benefits
to any Borrower or any Guarantor is a benefit to all of them, both directly or
indirectly, inasmuch as the successful operation and condition of the Borrowers
and the Guarantors is dependent upon the continued successful performance of the
functions of the integrated group as a whole.
6.16 Solvency. Each of the following is true for each Borrower and each
Guarantor and the Borrowers and the Guarantors on a consolidated basis: (a) the
fair saleable value of its property is (i) greater than the total amount of its
liabilities (including contingent liabilities), and (ii) greater than the amount
that would be required to pay its probable aggregate liability on its then
existing debts as they become absolute and matured; (b) its property is not
unreasonable in relation to its business or any contemplated or undertaken
transaction; and (c) it does not intend to incur, or believe that it will incur,
debts beyond its ability to pay such debts as they become due.
6.17 Disclosure. This Agreement and all other documents, certificates,
reports or statements or other information furnished to any Bank or the Agent in
writing by or on behalf of any Borrower in connection with the negotiation or
administration of this Agreement or any transactions contemplated hereby when
read together do not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained herein
and therein not misleading. There is no fact known to any Borrower which has
caused, or which likely would in the future in the reasonable judgment of the
Borrowers, cause a Material Adverse Effect (except for any economic conditions
which affect generally the industry in which the Borrowers and their
Subsidiaries conduct business), which has not been set forth in this Agreement
or in the other documents, certificates, statements, reports and other
information furnished in writing to the Banks by or on behalf of any Borrower in
connection with the transactions contemplated hereby.
SECTION 7. Covenants.
7.1 Affirmative Covenants. Each Borrower covenants and agrees that, until
the Termination Date and expiration of all Letters of Credit and thereafter
until the payment in full of the principal of and accrued interest on the Notes
and the performance of all other
CREDIT AGREEMENT Page 34
obligations of the Borrowers under this Agreement, the Notes and the Security
Documents, unless the Majority Banks shall otherwise consent in writing, each of
the Borrowers and each of the Guarantors shall:
(a) Preservation of Corporate Existence, Etc. Preserve and maintain
its corporate existence, rights and privileges and its material licenses,
franchises and permits, and qualify and remain qualified as a validly existing
corporation in good standing in each jurisdiction in which such qualification is
necessary under applicable law.
(b) Compliance with Laws, Etc. Comply in all material respects with
all applicable laws, rules, regulations and orders of any governmental
authority, whether federal, state, local or foreign (including without
limitation ERISA, the Code and Environmental Laws), in effect from time to time;
and pay and discharge promptly when due all taxes, assessments and governmental
charges or levies imposed upon it or upon its income, revenues or property,
before the same shall become delinquent or in default, as well as all lawful
claims for labor, materials and supplies or otherwise, which, if unpaid, might
give rise to Liens upon such properties or any portion thereof, except to the
extent that payment of any of the foregoing is then being contested in good
faith by appropriate legal proceedings and with respect to which adequate
financial reserves have been established on its books and records.
(c) Maintenance of Properties; Insurance. Maintain, preserve and
protect all property that is material to the conduct of its business and keep
such property in good repair, working order and condition and from time to time
make, or cause to be made all needful and proper repairs, renewals, additions,
improvements and replacements thereto necessary in order that the business
carried on in connection therewith may be properly conducted at all times in
accordance with customary and prudent business practices for similar businesses;
comply with all applicable permits, statutes, laws, orders, licenses, rules and
regulations relating to the Oil and Gas Interests owned by it, unless any non
compliance would not cause a Material Adverse Effect, and ensure that all wells
and other properties operated by it, either in its own name or as a partner, are
operated in accordance with good oil and gas field practices; comply with all of
its duties and obligations under, and take all actions to maintain, consistent
with prudent oil and gas practices, all leases and other rights in full force
and effect; and, in addition to that insurance required under the Security
Documents, maintain in full force and effect insurance with responsible and
reputable insurance companies or associations in such amounts, on such terms and
covering such risks, including fire and other risks insured against by extended
coverage, as is usually carried by companies engaged in similar businesses and
owning similar properties similarly situated and maintain in full force and
effect public liability insurance, insurance against claims for personal injury
or death or property damage occurring in connection with any of its activities
or any of any properties owned, occupied or controlled by it, in such amount as
it shall reasonably deem necessary, and maintain such other insurance as may be
required by law or as may be reasonably requested by the Banks for purposes of
assuring compliance with this Section 7.1(c).
CREDIT AGREEMENT Page 35
(d) Reporting Requirements. Furnish to each Bank, in form and sub-
stance satisfactory to the Majority Banks, the following:
(i) Promptly and in any event within three calendar days after
becoming aware of the occurrence of (A) any Default, (B) the
commencement of any material litigation against, by or
affecting the Borrowers and, upon request by any Bank, any
material developments therein, or (C) any development in the
business or affairs of the Borrowers which has resulted in,
or which is likely in the reasonable judgment of the
Borrowers to result in (including without limitation the
entering into of any material contract and/or undertaking by
the Borrowers) a Material Adverse Effect or (D) any
"reportable event" (as defined in ERISA) under, or the
institution of steps by the Borrowers or any Subsidiary to
withdraw from, or the institution of any steps to terminate,
any Plan, a statement of the chief financial officer of the
Borrowers setting forth details of such Default or such
event or condition or such litigation and the action which
CRI or any Subsidiary has taken and proposes to take with
respect thereto;
(ii) As soon as available and in any event within 45 days after
the end of each fiscal quarter of CRI, the consolidated
balance sheets of CRI and its Subsidiaries as of the end of
such quarter, and the related consolidated statements of
income and cash flow for the period commencing at the end of
the previous fiscal year and ending with the end of such
quarter, setting forth in each case in comparative form the
corresponding figures for the corresponding date or period
of the preceding fiscal year, all in reasonable detail and
duly certified (subject to year-end audit adjustments) by an
appropriate officer of the Borrowers as having been prepared
in accordance with generally accepted accounting principles,
together with a certificate of an appropriate officer of the
Borrowers with a computation in reasonable detail
calculating the covenants contained in Sections 7.2(a), (b),
(c), (i), (j) and (l) hereof;
(iii)As soon as available and in any event within 120 days after
the end of each fiscal year, a copy of the consolidated
balance sheet of CRI and its Subsidiaries for the fiscal
year and related statements of income and cash flow with a
customary audit report thereon by Arthur Andersen LLP or
other independent certified public accountants selected by
CRI and acceptable to the Banks, without qualifications
unacceptable to the Banks together with a certificate of
such accountants stating that they have reviewed this
Agreement and stating further that in making their review in
accordance with generally accepted accounting principles
nothing came to their attention that made them believe that
any Default exists, or if their examination has disclosed
the existence of any Default, specifying the nature, period
of existence and status thereof, together with a certificate
of an appropriate officer of the Borrowers with a
computation
CREDIT AGREEMENT Page 36
in reasonable detail calculating the covenants contained
in Sections 7.2(a), (b), (c), (i), (j) and (l) hereof;
(iv) Upon the request of the Majority Banks or the Agent, a
schedule of all oil, gas, and other mineral production
attributable to all material Oil and Gas Interest of the
Borrowers and each Guarantor, and in any event all such Oil
and Gas Interests included in the Borrowing Base;
(v) Promptly, all title or other information received after the
Effective Date by the Borrowers or any Guarantor which
discloses any material defect in the title to any material
asset included in the Borrowing Base;
(vi) As soon as practicable and in any event within 30 days after
the sending or filing thereof, copies of all such financial
statements and reports as it shall send to its security
holders and of all final prospectuses under the Securities
Act of 1933 (other than Form S-8), reports on Forms 10-Q,
10-K and 8-K and all similar regular and periodic reports
filed by it (i) with any federal department, bureau,
commission or agency from time to time having jurisdiction
with respect to the sale of securities or (ii) with any
securities exchange;
(vii)As soon as available and in any event within 105 days after
the end of each calendar year, an annual reserve report with
respect to all Hydrocarbon reserves of the Borrowers and the
Guarantors prepared by an independent engineering firm of
recognized standing acceptable to the Majority Banks in
accordance with accepted industry practices and otherwise
acceptable and in form and substance satisfactory to the
Majority Banks, and including without limitation all assets
included in the Borrowing Base;
(viii) Upon the request of the Banks, an updated reserve report
with respect to all Hydrocarbon reserves of the Borrowers
and the Guarantors prepared by the Borrowers in accordance
with accepted industry practices and otherwise acceptable
and in form and substance satisfactory to the Majority
Banks, and including without limitation all assets included
in the Borrowing Base;
(ix) Promptly, any management letter from the auditors for any
Borrower and all other information respecting the business,
properties or the condition or operations, financial or
otherwise, including, without limitation, geological and
engineering data of any Borrower or any Guarantor and any
title work with respect to any Oil and Gas Interests of any
Borrowers or any Guarantor as any Bank may from time to time
reasonably request;
(x) At all times after the date ninety (90) days after the
Effective Date, if requested by the Majority Banks, provide
title opinions and
CREDIT AGREEMENT Page 37
other opinions of counsel, in each case in form and
substance acceptable to the Majority Banks, with respect to
at least eighty (80%) percent of the value of the assets
included in the Borrowing Base; and
(xi) As soon as available and in any event within 45 days after
the end of each month, (A) the balance sheet of CNG as of
the end of each month, and the related statements of income
for the period commencing at the end of the previous fiscal
year and ending with the end of such month, setting forth in
each case in comparative form the corresponding figures for
the corresponding date or period of the preceding fiscal
year, all in reasonable detail and duly certified (subject
to year-end audit adjustments) by an appropriate officer of
CNG as having been prepared in accordance with generally
accepted accounting principles, (B) a schedule of accounts
receivable of CNG, certified by an appropriate officer of
CNG, as of the end of such month, indicating the totals of
accounts receivable by type, and by age, describing any
returns, defenses, setoffs or other pertinent information in
connection therewith, together with evidence of letters of
credit supporting Eligible CNG Accounts Receivable, and (C)
a computation, certified by an appropriate officer of CNG,
of the CNG/CRI Guaranty Formula as of the end of such month.
(e) Access to Records, Books, Etc. At any reasonable time and
from time to time, permit any Bank or any agents or representatives thereof, at
the Borrowers' own expense, to examine and make copies of and abstracts from the
records and books of account of, and visit the properties of, the Borrowers and
the Guarantors, and to discuss the affairs, finances and accounts of the
Borrowers and the Guarantors with their respective officers and employees.
Without limiting the foregoing, the Borrowers and the Guarantors agree that any
reasonable time and from time to time, the Borrowers will permit any Bank or any
agents or representatives thereof to inspect, at the office of the Borrowers and
the Guarantors listed on its signature page hereto, all opinions with respect to
title and other material work received by the Borrowers or the Guarantors with
respect to any asset included in the Borrowing Base.
7.2 Negative Covenants. Until payment in full of the principal of and
accrued interest on the Notes, the expiration of this Agreement and all Letters
of Credit and the payment and performance of all other obligations of the
Borrowers and each Guarantor under this Agreement, the Notes and the Security
Documents, each Borrower and each Guarantor agree that, unless the Majority
Banks shall otherwise consent in writing, none of them shall:
(a) Current Ratio. Permit or suffer the ratio of (i) the sum of
Current Assets plus the unused availability under the revolving credit facility
established by Section 2.1(a), to (ii) Current Liabilities at any time to be
less than 1.0 to 1.0.
(b) Tangible Net Worth. Permit or suffer Consolidated Tangible
Net Worth of CRI and its Subsidiaries to be less than, at any time, the sum of
(i) $25,000,000, plus
CREDIT AGREEMENT Page 38
(ii) 50% of Consolidated Net Income of CRI and its
Subsidiaries for any fiscal year, commencing with the fiscal
year ending December 31, 1996, and to be added as of the
last day of each such fiscal year, provided that if such
Consolidated Net Income is negative in any fiscal year the
amount added pursuant to this clause (ii) shall be zero and
shall not reduce the amount added pursuant to this clause
(ii) for any other fiscal year, plus (iv) 75% of the net
cash proceeds of any equity offering or other sale of equity
of CRI or any of its Subsidiaries.
(c) Interest Coverage Ratio. Permit or suffer, as of the last day
of any fiscal quarter of CRI, the ratio of (i) Consolidated Adjusted Cash Flow
plus, to the extent deducted in determining such Consolidated Adjusted Cash
Flow, Consolidated Interest Expense and income taxes, as calculated for the four
fiscal quarters then ending, to (ii) Consolidated Interest Expense, as
calculated for the four fiscal quarters then ending, to be less than (A) 2.5 to
1.0 as of the last day of any fiscal quarter ending prior to the initial
issuance of any Subordinated Debt of at least $75,000,000 in principal amount
and (B) 2.0 to 1.0 as of the last day of any fiscal quarter thereafter.
(d) Indebtedness. Create, incur, assume, guaranty or in any
manner become liable in respect of, or suffer to exist, any Indebtedness other
than:
(i) The Advances;
(ii) The Indebtedness described in Schedule 7.2(d) hereto,
including any refinancing or extension thereof but no
increase in the amount thereof shall be permitted;
(iii)Other Indebtedness in aggregate outstanding amount not
to exceed $1,000,000;
(iv) Unsecured insurance premium financing incurred in the
ordinary course of business;
(v) Indebtedness pursuant to any Swap Agreement with any
Bank, any person with an investment grade debt rating
acceptable to the Agent and any other person acceptable
to the Agent;
(vi) Indebtedness permitted pursuant to Section 7.2(i); and
(vii)Subordinated Debt in aggregate outstanding principal
amount not to exceed $100,000,000.
(e) Liens. Create, incur or suffer to exist, any Lien to exist on
any assets, rights, revenues or property, real, personal or mixed, tangible or
intangible, other than:
CREDIT AGREEMENT Page 39
(i) Liens for taxes not delinquent or for
taxes being contested in good faith by appropriate proceedings
and as to which adequate financial reserves have been
established on its books and records;
(ii) Liens (other than any Lien imposed by
ERISA) created and maintained in the ordinary course of
business which are not material in the aggregate, and which
would not have a Material Adverse Effect and which constitute
(A) pledges or deposits under worker's compensation laws,
unemployment insurance laws or similar legislation, (B) good
faith deposits in connection with bids, tenders, contracts or
leases to which any Borrower or any Guarantor is a party for a
purpose other than borrowing money or obtaining credit,
including rent security deposits, (C) liens imposed by law,
such as those of carriers, warehousemen, operators and
mechanics, if payment of the obligation secured thereby is not
yet due, (D) Liens securing taxes, assessments or other
governmental charges or levies not yet subject to penalties
for nonpayment, and (E) pledges or deposits to secure public
or statutory obligations of any Borrower or any Guarantor, or
surety, customs or appeal bonds to which such Borrower or such
Guarantor is a party;
(iii)Liens created pursuant to the Security Documents
and Liens expressly permitted by the Security Documents;
(iv) Each Lien described on Schedule 7.2(e) hereto may
be suffered to exist upon the same terms as those existing
on the date hereof, but no increase in the amount of
Indebtedness secured thereby; and
(v) Liens securing Indebtedness permitted pursuant to
Section 7.2(d)(iii) created to secure payment of a portion
of the purchase price of, or existing at the time of
acquisition of, any tangible fixed asset acquired by any
Borrower or any Guarantor if the outstanding principal
amount of the Indebtedness secured by such Lien does not at
any time exceed the purchase price paid by such Borrower or
such Guarantor for such assets, provided that such Lien does
not encumber any other asset at any time owned by such
Borrower or such Guarantor.
(f) Merger; Acquisitions; Etc. Purchase or otherwise acquire,
whether in one or a series of transactions, unless the Majority Banks shall
otherwise consent in writing, all or any substantial portion of the business
assets, rights, revenues or property, real, personal or mixed, tangible or
intangible, of any person, or all or any substantial portion of the capital
stock of or other ownership interest in any other person, provided that
Borrowers may make such purchases or other acquisitions provided that the Bridge
Loan has been fully paid and the aggregate amount paid or payable or otherwise
transferred for all such purchases or other acquisitions after the Effective
Date shall not exceed $20,000,000 (excluding the Purchased
CREDIT AGREEMENT Page 40
Black Stone Assets) in aggregate amount in any fiscal year; nor merge or
consolidate or amalgamate with any other person or take any other action having
a similar effect, nor enter into any joint venture or similar arrangement with
any other person, other than a joint venture or similar arrangement in
connection with oil and gas drilling ventures, oil and gas leases, natural gas
transportation or processing or otherwise in connection with oil and gas
properties in the ordinary course of business. Each of the Banks acknowledges
and agrees that it has previously provided consent to each acquisition by each
Borrower and each Guarantor prior to the Effective Date pursuant to the terms of
the Existing Credit Agreement.
(g) Disposition of Assets; Etc. Without the prior written consent
of the Majority Banks, sell, lease, license, transfer, assign or otherwise
dispose of any Collateral or any of its other business, assets, rights, revenues
or property, real, personal or mixed, tangible or intangible, whether in one or
a series of transactions, other than (i) inventory sold in the ordinary course
of business upon customary credit terms, and (ii) if no Default has occurred and
is continuing or would be caused thereby, other sales of assets in (A) aggregate
amount not to exceed $1,000,000 in any twelve month period and (B) aggregate
amount exceeding $1,000,000 in any twelve month period provided that in
connection with any such sale all the proceeds thereof are used to prepay the
Advances and reduce the Commitments by a like amount.
(h) Nature of Business. Make any substantial change in the nature
of its business from that engaged in on the date of this Agreement or engage in
any other businesses other than those in which it is engaged on the date of this
Agreement.
(i) Investments, Advance and Advances, Contingent Liabilities.
Purchase or otherwise acquire any capital stock of or other ownership interest
in, or debt securities of or other evidences of Indebtedness of, any other
person; nor make any loan or advance of any of its funds or property or make any
other extension of credit to, or make any investment or acquire any interest
whatsoever in, any other person, except (i) loans and advances to officers of
the Borrowers, provided that the aggregate amount of all such loans and advances
does not exceed $5,000, (ii) loans and advances among the Borrowers only, (iii)
other loans and advances, provided that the aggregate amount of all such loans
and advances, together with Indebtedness allowed under Section 7.2(d)(iii),
shall not exceed $1,000,000 and (iv) loans and advances by CRI to CNG in an
aggregate amount not to exceed $5,000,000, the proceeds of which shall be used
in connection with the purchase of pipeline and marketing operations and to
provide ongoing working capital for such entity; nor incur any Contingent
Liability except for any guaranty of the permitted Indebtedness described in
Section 7.2(d)(i), guarantees by CRI of obligations of CNG to purchase natural
gas in an aggregate amount outstanding at any time not to exceed the lesser of
(A) $2,000,000 minus the aggregate outstanding Letters of Credit or (B) the
CNG/CRI Guaranty Formula minus the aggregate outstanding Letters of Credit and
(v) the indebtedness described on Schedule 7.2(i), if any.
CREDIT AGREEMENT Page 41
(j) Dividends. With respect to CRI only, make, pay, declare or
authorize any dividend, payment or other distribution in respect of any class of
its capital stock or any dividend, payment or distribution in connection with
the redemption, repurchase, defeasance, conversion, retirement or other
acquisition, directly or indirectly, of any shares of its capital stock, except
(i) solely in shares of capital stock of CRI and (ii) cash dividends in respect
of 1994 Preferred Stock only in aggregate amount not to exceed $1,174,000 in any
twelve month period and only if both before the payment of such cash dividend
and after giving effect to the payment of such cash dividend no Default or Event
of Default shall have occurred and be continuing and the Bridge Loan shall have
been paid in full and (iii) cash dividends in respect to the 1995 Preferred
Stock only in an aggregate amount not to exceed $1,372,500 in any twelve month
period and only if both before the payment of such dividend and after giving
effect to the payment of such dividend to no Default or Event of Default shall
have occurred and be continuing and the Bridge Loan shall have been paid in
full. For purposes of this Section 7.2(j), "capital stock" shall include capital
stock (preferred, common or other) and any securities exchangeable for or
convertible into capital stock and any warrants, rights or other options to
purchase or otherwise acquire capital stock or such securities.
(k) Transactions with Affiliates. Enter into or be a party to any
transaction or arrangement with any Affiliate (including, without limitation,
the purchase from, sale to or exchange of property with, or the rendering of any
service by or for, any Affiliate), except in the ordinary course of and pursuant
to the reasonable requirements of the Borrowers' or the Guarantors' business and
upon fair and reasonable terms no less favorable to such Borrower or such
Guarantor than would be obtained in a comparable arms-length transaction with a
Person other than an Affiliate and except the loans and advances described in
Section 7.2(i).
(l) Subordinated Debt. Make, or permit any Subsidiary to make any
amendment or modification to the indenture, note or other agreement or
instrument evidencing or governing any Subordinated Debt, other than amendments
which do not affect any of the material terms of the Subordinated Debt as
determined by the Agent and which require only the approval of the trustee under
the indenture under which the Subordinated Debt was issued and do not require
the approval of any holder of the Subordinated Debt, or directly or indirectly
voluntarily prepay, defease or in substance defease, purchase, redeem, retire or
otherwise acquire or make any other optional payment on, any Subordinated Debt,
other than prepayments of Subordinated Debt which satisfy both of the following
conditions: (i) both prior to and after giving effect to such prepayment no
Default exists or would be caused thereby and (ii) such prepayment is solely
from proceeds received by CRI from the issuance of common stock of CRI or from
proceeds received by CRI from the issuance of Subordinated Debt permitted under
this Agreement.
(m) Payments and Modification of Debt. Other than Indebtedness to
the Banks and the Agent pursuant hereto and prepayments of Subordinated Debt to
the extent permitted by Section 7.2(l), make, or permit any Subsidiary to make,
any optional payment,
CREDIT AGREEMENT Page 42
prepayment or redemption, directly or indirectly, of any of its Indebtedness or
enter into any agreement or arrangement providing for the defeasance of any such
Indebtedness, or amend or modify, or consent or agree to any amendment or
modification of, any instrument or agreement under which any of its Indebtedness
is issued or created or otherwise related thereto, provided that this Section
7.2(m) shall not prohibit the prepayment of such Indebtedness (other than
Subordinated Debt which is governed by Section 7.2(l)) if no Default exists or
would exist after giving effect to such prepayment and the aggregate amount of
all such prepayments since the Effective Date does not exceed $2,000,000 in
aggregate amount.
(n) Additional Covenants. If at any time any Borrower shall enter
into or be a party to any instrument or agreement, including all such
instruments or agreements in existence as of the date hereof and all such
instruments or agreements entered into after the date hereof, relating to or
amending any terms or conditions applicable to any of its Indebtedness which
includes covenants, terms, conditions or defaults not substantially provided for
in this Agreement or more favorable to the lender or lenders thereunder than
those provided for in this Agreement, then the Borrowers shall promptly so
advise the Agent and the Banks. Thereupon, if the Agent shall request, upon
notice to the Borrowers, the Agents and the Banks shall enter into an amendment
to this Agreement or an additional agreement (as the Agent may request),
providing for substantially the same covenants, terms, conditions and defaults
as those provided for in such instrument or agreement to the extent required and
as may be selected by the Agents. In addition to the foregoing, any covenants,
terms, conditions or defaults in any existing agreements or other documents
evidencing or relating to any Indebtedness of any Borrower not substantially
provided for in this Agreement or more favorable to the holders of such
Indebtedness, are hereby incorporated by reference into this Agreement to the
same extent as if set forth fully herein, and no subsequent amendment, waiver or
modification thereof shall effect any such covenants, terms, conditions or
defaults as incorporated herein.
SECTION 8. Default.
8.1 Events of Default. The occurrence of any one of the
following events or conditions shall be deemed an "Event of Default" hereunder
unless waived by the Majority Banks pursuant to Section 10.1:
(a) Any Borrower shall fail to pay within 2 Business Days of when
due any principal of or interest on the Notes (whether pursuant to Section
4.1(a), Section 4.1(c) or otherwise), any fees or any other amount payable
hereunder or under any Security Document; or
(b) Any representation or warranty made by any Borrowers or any
Guarantor in Section 6 hereof, in any Security Document or any other document or
certificate furnished by or on behalf of any Borrower or any Guarantor in
connection with this Agreement, shall prove to have been incorrect in any
material respect when made; or
CREDIT AGREEMENT Page 43
(c) (i) Any Borrower or any Guarantor shall fail to perform or
observe any term, covenant or agreement contained in Sections 7.1(b), 7.1(c)
(other than the agreement to maintain continuous insurance coverage), 7.1(d),
7.2(a), 7.2(b), 7.2(c) or 7.2(l) hereof or in any Security Document, any other
Loan Document or any other agreement among the Borrowers, Guarantors, the Banks
and the Agent, or any of them, and such failure shall remain unremedied for 30
calendar days after the earlier of the date notice thereof shall have been given
to Borrowers by the Agent or any Bank or any Borrower knows of such failure, or
(ii) any Borrower or any Guarantor shall fail to perform or observe any other
term, covenant, or agreement contained in this Agreement; or
(d) Any Borrower or any Guarantor shall fail to pay any part of
the principal of, the premium, if any, or the interest on, or any other payment
of money due under any of its Indebtedness (other than Indebtedness hereunder),
beyond any period of grace provided with respect thereto, which individually or
together with other such Indebtedness as to which any such failure exists has an
aggregate outstanding principal amount in excess of $1,000,000; or if any
Borrower or any Guarantor fails to perform or observe any other term, covenant
or agreement contained in any agreement, document or instrument evidencing or
securing any such Indebtedness, or under which any such Indebtedness was issued
or created, beyond any period of grace, if any, provided with respect thereto if
the effect of such failure is either (i) to cause, or permit the holders of such
Indebtedness (or a trustee on behalf of such holders) to cause, any payment in
respect of such Indebtedness to become due prior to its due date or (ii) to
permit the holders of such Indebtedness (or a trustee on behalf of such holder)
to elect a majority of the board of directors of any Borrower or any Guarantor;
or
(e) A judgment or order for the payment of money, which together
with other such judgments or orders exceeds the aggregate amount of $1,000,000,
shall be rendered against any Borrower or any Guarantor and either (i)
enforcement proceedings shall have been commenced by any creditor upon such
judgment or order and such judgment or order shall have remained unsatisfied and
such proceedings shall have remained unstayed for a period of 30 consecutive
days, or (ii) for a period of 30 consecutive days, such judgment or order shall
have remained unsatisfied and a stay of enforcement thereof, by reason of
pending appeal or otherwise, shall not have been in effect; or
(f) The occurrence or existence with respect to any Borrower or
any Guarantor or any of their ERISA Affiliates of any of the following: (i) any
"prohibited transaction" (as defined in Section 406 of ERISA or Section 4975 of
the Code) involving any Plan, (ii) any Reportable event shall occur with respect
to any Plan, (iii) the filing under ERISA of a notice of intent to terminate any
Plan or the termination of any Plan, (iv) any event or circumstance exists which
might constitute grounds entitling the PBGC to institute proceedings under ERISA
for the termination of, or the appointment of a trustee to administer, any Plan,
or the institution of the PBGC of any such proceedings, or (v) complete or
partial withdrawal under ERISA from any Multiemployer Plan or the
reorganization, insolvency, or termination of any Multiemployer Plan, and in
each of the foregoing cases, such event or condition, together with
CREDIT AGREEMENT Page 44
all other events or conditions, if any, could in the opinion of the Banks
subject any Borrower or any Guarantor to any tax, penalty, or other liability to
a Plan, the PBGC, or otherwise (or any combination thereof); or
(g) Any Borrower or any Guarantor shall generally not pay its
debts as they become due, or shall admit in writing its inability to pay its
debts generally, or shall make a general assignment for the benefit of
creditors, or shall institute, or there shall be instituted against any Borrower
or any Guarantor, any proceeding or case seeking to adjudicate it a bankrupt or
insolvent or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief or protection of
debtors or seeking the entry of an order for relief or the appointment of a
receiver, trustee, custodian or other similar official for it or for any
substantial part of its property, and, if such proceeding is instituted against
any Borrower or any Guarantor and is being contested by such Borrower or such
Guarantor, as the case may be, in good faith by appropriate proceedings, such
proceedings shall remain undismissed or unstayed for a period of 30 days; or the
any Borrower or any Guarantor shall take any action (corporate or other) to
authorize or further any of the actions described above in this subsection; or
(h) Any event of default described in any Security Document shall
have occurred and be continuing, or any material provision of any Security
Document shall at any time for any reason cease to be valid and binding and
enforceable against any obligor thereunder, or the validity, binding effect or
enforceability thereof shall be contested by any person, or any obligor, shall
deny that it has any or further liability or obligation thereunder, or any
Security Document shall be terminated, invalidated or set aside, or be declared
ineffective or inoperative or in any way cease to give or provide to the Bank
the benefits purported to be created thereby; or
(i) (A) COG or COE shall fail to be a wholly-owned Subsidiary of
CRI, (B) COGL shall fail to be a wholly-owned subsidiary of COG or, after the
acquisition is completed pursuant to the Purchase Documents, Black Stone shall
fail to be a wholly-owned subsidiary of COG, or (C) the Board of Directors of
CRI shall not consist of a majority of the Continuing Directors of CRI; or
(j) Any Change in Control shall occur.
8.2 Remedies.
(a) Upon the occurrence and during the continuance of any Event
of Default, the Agent may, and upon being directed to do so by the Majority
Banks, shall, by notice to the Borrowers terminate the Commitments or declare
the outstanding principal of, and accrued interest on, the Notes and all other
amounts due under this Agreement and all other
CREDIT AGREEMENT Page 45
Loan Documents, to be immediately due and payable, or demand immediate delivery
of cash collateral, and the Borrowers agree to deliver such cash collateral upon
such demand, in an amount equal to the maximum amount that may be available to
be drawn at any time prior to the stated expiry of all outstanding Letters of
Credit, or all of the above, whereupon the Commitments shall terminate forthwith
and all such amounts shall become immediately due and payable, or both, as the
case may be, provided that in the case of any event or condition described in
Section 8.1(g), the Commitments shall automatically terminate forthwith and all
such amounts shall automatically become immediately due and payable without
notice; in each case without demand, presentment, protest, diligence, notice of
dishonor or other formality, all of which are hereby expressly waived.
(b) Upon the occurrence and during the continuance of such Event
of Default, the Agent may, and upon being directed to do so by the Majority
Banks, shall, in addition to the remedies provided in Section 8.2(a), enforce
its rights either by suit in equity, or by action at law, or by other
appropriate proceedings, whether for the specific performance (to the extent
permitted by law) of any covenant or agreement contained in this Agreement or in
any then outstanding Note or any Security Document or in aid of the exercise of
any power granted in this Agreement, any then outstanding Notes or any Security
Document, and may enforce the payment of any then outstanding Notes and any of
the other rights of the Agent and the Banks in any other agreement or available
at law or in equity.
(c) Upon the occurrence and during the continuance of any Event
of Default hereunder, each Bank may at any time and from time to time, without
notice to the Borrowers (any requirement for such notice being expressly waived
by the Borrowers and Guarantors) set off and apply against any and all of the
obligations of any Borrower or any Guarantor now or hereafter existing under
this Agreement, any of the Notes or the Security Documents, any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Bank to or for the credit or the
account of any Borrower or any Guarantor and any property of any Borrower or any
Guarantor from time to time in possession of such Bank, irrespective of whether
or not any Bank shall have made any demand hereunder and although such
obligations may be contingent and unmatured. The rights of the Banks under this
Section 8.2(c) are in addition to other rights and remedies (including, without
limitation, other rights of setoff) which the Banks may have.
8.3 Distribution of Proceeds. All proceeds of any realization on the
Collateral received by the Agent pursuant to the Security Documents or any
payments on any of the liabilities secured by the Security Documents received by
the Agent or any Bank upon and during the continuance of any Event of Default
shall be allocated and distributed as follows:
(a) First, to the payment of all costs and expenses, including
without limitation all attorneys' fees, of the Agent in connection with the
enforcement of the Security Documents and otherwise administering this
Agreement;
CREDIT AGREEMENT Page 46
(b) Second, to the payment of all costs, expenses and fees,
including without limitation, commitment fees and attorneys' fees, owing to the
Banks pursuant to the Bank Obligations on a pro rata basis in accordance with
the Bank Obligations consisting of fees, costs and expenses owing to the Banks
under the Bank Obligations for application to payment of such liabilities;
(c) Third, to the Banks on a pro rata basis in accordance with
the Bank Obligations consisting of interest and principal (including without
limitation any cash collateral for any outstanding Letters of Credit) owing to
the Banks under the Bank Obligations and to any Bank owing pursuant to any Swap
Agreement to which it is a party (whether pursuant to a termination thereof or
otherwise), for application to payment of such liabilities;
(d) Fourth, to the payment of any and all other amounts owing to
the Banks on a pro rata basis in accordance with the total amount of such
Indebtedness owing to each of the Banks, for application to payment of such
liabilities; and
(e) Fifth, to the Borrowers or such other person as may be
legally entitled thereto.
8.4 Letter of Credit Liabilities. For the purposes of payments and
distributions under Section 8.3, the full amount of Bank Obligations on account
of any Letter of Credit then outstanding but not drawn upon shall be deemed to
be then due and owing. Amounts distributable to the Banks on account of such
Bank Obligations under such Letter of Credit shall be deposited in a separate
interest bearing collateral account in the name of and under the control of the
Agent and held by the Agent first as security for such Letter of Credit Bank
Obligations and then as security for all other Bank Obligations and the amount
so deposited shall be applied to the Letter of Credit Bank Obligations at such
times and to the extent that such Letter of Credit Bank Obligations become
absolute liabilities and if and to the extent that the Letter of Credit Bank
Obligations fail to become absolute Bank Obligations because of the expiration
or termination of the underlying Letters of Credit without being drawn upon then
such amounts shall be applied to the remaining Bank Obligations in the order
provided in Section 8.3. Each Borrower hereby grants to the Agent, for the
benefit of the Banks, a lien and security interest in all such funds deposited
in such separate interest bearing collateral account, as security for all the
Bank Obligations as set forth above.
CREDIT AGREEMENT Page 47
SECTION 9. The Agent, the Co-Agent and the Banks.
9.1 Appointment; Nature of Relationship. The First National Bank of
Chicago is hereby appointed by the Lenders as the Agent hereunder and under each
other Loan Document, and each of the Lenders irrevocably authorizes the Agent to
act as the contractual representative of such Lender with the rights and duties
expressly set forth herein and in the other Loan Documents. The Agent agrees to
act as such contractual representative upon the express conditions contained in
this Section 9. Notwithstanding the use of the defined term "Agent," it is
expressly understood and agreed that the Agent shall have not have any fiduciary
responsibilities to any Lender by reason of this Agreement or any other Loan
Document and that the Agent is merely acting as the representative of the
Lenders with only those duties as are expressly set forth in this Agreement and
the other Loan Documents. In its capacity as the Lenders' contractual
representative, the Agent (i) does not hereby assume any fiduciary duties to any
of the Lenders, (ii) is a "representative" of the Lenders within the meaning of
Section 9- 105 of the Uniform Commercial Code and (iii) is acting as an
independent contractor, the rights and duties of which are limited to those
expressly set forth in this Agreement and the other Loan Documents. Each of the
Lenders hereby agrees to assert no claim against the Agent on any agency theory
or any other theory of liability for breach of fiduciary duty, all of which
claims each Lender hereby waives.
9.2 Powers. The Agent shall have and may exercise such powers under
the Loan Documents as are specifically delegated to the Agent by the terms of
each thereof, together with such powers as are reasonably incidental thereto.
The Agent shall have no implied duties to the Lenders, or any obligation to the
Lenders to take any action thereunder except any action specifically provided by
the Loan Documents to be taken by the Agent.
9.3 General Immunity. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to the Borrowers, any Borrower,
the Lenders or any Lender for any action taken or omitted to be taken by it or
them hereunder or under any other Loan Document or in connection herewith or
therewith except for its or their own gross negligence or willful misconduct.
9.4 No Responsibility for Loans, Recitals, etc. Neither the Agent nor
any of its directors, officers, agents or employees shall be responsible for or
have any duty to ascertain, inquire into, or verify (i) any statement, warranty
or representation made in connection with any Loan Document or any borrowing
hereunder; (ii) the performance or observance of any of the covenants or
agreements of any obligor under any Loan Document, including, without
limitation, any agreement by an obligor to furnish information directly to each
Lender; (iii) the satisfaction of any condition specified in Section 3.2 or
otherwise hereunder; (iv) the validity, enforceability, effectiveness,
sufficiency or genuineness of any Loan Document or any other instrument or
writing furnished in connection therewith; or (v) the value, sufficiency,
creation, perfection or priority of any interest in any collateral security. The
Agent shall have no duty to disclose to the Lenders information that is not
required to be furnished by the Borrowers to the Agent at
CREDIT AGREEMENT Page 48
such time, but is voluntarily furnished by the Borrowers to the Agent (either in
its capacity as Agent or in its individual capacity).
9.5 Action on Instructions of Lenders. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder and under any
other Loan Document in accordance with written instructions signed by the
Majority Lenders, and such instructions and any action taken or failure to act
pursuant thereto shall be binding on all of the Lenders and on all holders of
Notes. The Lenders hereby acknowledge that the Agent shall be under no duty to
take any discretionary action permitted to be taken by it pursuant to the
provisions of this Agreement or any other Loan Document unless it shall be
requested in writing to do so by the Majority Lenders. The Agent shall be fully
justified in failing or refusing to take any action hereunder and under any
other Loan Document unless it shall first be indemnified to its satisfaction by
the Lenders pro rata against any and all liability, cost and expense that it may
incur by reason of taking or continuing to take any such action.
9.6 Employment of Agents and Counsel. The Agent may execute any of its
duties as Agent hereunder and under any other Loan Document by or through
employees, agents, and attorneys-in-fact and shall not be answerable to the
Lenders, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Agent shall be entitled to advice of
counsel concerning all matters pertaining to the agency hereby created and its
duties hereunder and under any other Loan Document.
9.7 Reliance on Documents; Counsel. The Agent shall be entitled to
rely upon any Note, notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper person or persons, and, in respect to
legal matters, upon the opinion of counsel selected by the Agent, which counsel
may be employees of the Agent.
9.8 Agent's Reimbursement and Indemnification. The Lenders agree to
reimburse and indemnify the Agent ratably in proportion to their respective
Commitments (or, if the Commitments have been terminated, in proportion to their
Commitments immediately prior to such termination) (i) for any amounts not
reimbursed by the Borrowers for which the Agent is entitled to reimbursement by
the Borrowers under the Loan Documents, (ii) for any other expenses incurred by
the Agent on behalf of the Lenders, in connection with the preparation,
execution, delivery, administration and enforcement of the Loan Documents and
(iii) for any liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against the Agent in
any way relating to or arising out of the Loan Documents or any other document
delivered in connection therewith or the transactions contemplated thereby, or
the enforcement of any of the terms thereof or of any such other documents,
provided that no Lender shall be liable for any of the foregoing to the extent
they arise from the gross negligence
CREDIT AGREEMENT Page 49
or willful misconduct of the Agent. The obligations of the Lenders under this
Section 9.8 shall survive payment of the Bank Obligations and termination of
this Agreement.
9.9 Notice of Default. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default hereunder unless
the Agent has received written notice from a Lender or a Borrower referring to
this Agreement describing such Default or Event of Default and stating that such
notice is a "notice of default". In the event that the Agent receives such a
notice, the Agent shall give prompt notice thereof to the Lenders.
9.10 Rights as a Lender. In the event the Agent is a Lender, the Agent
shall have the same rights and powers hereunder and under any other Loan
Document as any Lender and may exercise the same as though it were not the
Agent, and the term "Lender" or "Lenders" shall, at any time when the Agent is a
Lender, unless the context otherwise indicates, include the Agent in its
individual capacity. The Agent may accept deposits from, lend money to, and
generally engage in any kind of trust, debt, equity or other transaction, in
addition to those contemplated by this Agreement or any other Loan Document,
with any Borrower or any of their respective Subsidiaries in which any Borrower
or such Subsidiary is not restricted hereby from engaging with any other Person.
The Agent, in its individual capacity, is not obligated to remain a Lender.
9.11 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender and based
on the financial statements prepared by the Borrowers and such other documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and the other Loan Documents. Each Lender
also acknowledges that it will, independently and without reliance upon the
Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the other Loan Documents.
9.12 Successor Agent. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrowers, such resignation to be
effective upon the appointment of a successor Agent or, if no successor Agent
has been appointed, forty-five days after the retiring Agent gives notice of its
intention to resign. Upon any such resignation, the Majority Lenders shall have
the right to appoint, on behalf of the Borrowers and the Lenders, a successor
Agent. If no successor Agent shall have been so appointed by the Majority
Lenders within thirty days after the resigning Agent's giving notice of its
intention to resign, then the resigning Agent may appoint, on behalf of the
Borrowers, and the Lenders, a successor Agent. If the Agent has resigned and no
successor Agent has been appointed, the Lenders may perform all the duties of
the Agent hereunder and the Borrowers shall make all payments in respect of the
Bank Obligations to the applicable Lender and for all other purposes shall deal
directly with the Lenders. No successor Agent shall be deemed to be appointed
hereunder until such successor Agent has accepted the appointment. Any such
successor Agent shall be a commercial bank having capital and retained earnings
of at least $50,000,000. Upon the acceptance of any
CREDIT AGREEMENT Page 50
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the resigning Agent. Upon the effectiveness of the resignation of
the Agent, the resigning Agent shall be discharged from its duties and
obligations hereunder and under the Loan Documents. After the effectiveness of
the resignation of an Agent, the provisions of this Section 9 shall continue in
effect for the benefit of such Agent in respect of any actions taken or omitted
to be taken by it while it was acting as the Agent hereunder and under the other
Loan Documents.
9.13 Pro Rata Sharing by Banks. Each Bank agrees with every other Bank
that, in the event that it shall receive and retain any payment on account of
the Borrowers's obligations under this Agreement, the Notes or the Security
Documents in a greater proportion than that received by any other Bank, whether
such payment be voluntary, involuntary or by operation of law, by application of
set-off of any indebtedness or otherwise, then such Bank shall promptly purchase
a participation interest from the other Banks, without recourse, for cash and at
face value, ratably in accordance with its Pro Rata Share, in such an amount
that each Bank shall have received payment in respect of such obligations in
accordance with its Pro Rata Share; provided, that if any such purchase be made
by any Bank and if any such excess payment relating thereto or any part thereof
is thereafter recovered from such Bank, appropriate adjustment in the related
purchase from the other Banks shall be made by rescission and restoration of the
purchase price as to the portion of such excess payment so recovered. It is
further agreed that, to the extent there is then owing by the Borrowers to any
Bank indebtedness other than that evidenced by this Agreement, the Notes and the
Security Documents to which such Bank may apply any involuntary payments of
indebtedness by the Borrowers, including those resulting from exercise of rights
of set-off or similar rights, such Bank shall apply all such involuntary
payments first to obligations of the Borrowers to the Banks hereunder and under
the Notes and the Security Documents and then to such other indebtedness owed to
it by the Borrowers. In addition, it is further agreed that any and all proceeds
resulting from a sale or other disposition of any collateral which may be
hereafter granted for the benefit of the Banks to secure the obligations of the
Borrowers hereunder, shall be applied first to obligations of the Borrowers to
the Banks hereunder and under the Notes and the Security Documents, and then
ratably to any other indebtedness owed by the Borrowers to the Banks which is
secured by such collateral.
9.14 Determination of Borrowing Base, Etc. Any redetermination of the
Borrowing Base shall be made mutually by the Agent and the Co-Agent (provided
that if the Agent and the Co-Agent cannot so mutually agree, such
redetermination of Borrowing Base shall be the lower of such redetermination
made by the Agent or the Co-Agent individually) and submitted to the Banks. The
redetermined Borrowing Base shall then be effective when approved by the
Majority Banks. The Borrowing Base may be re-evaluated from time to time as
determined by the Majority Banks, and will be re-evaluated upon the request of
the Borrowers (provided that the Borrowers cannot request any re-evaluation of
the Borrowing Base more than four times in any twelve month period), and, in
addition, on or within 20 days prior to the date any Subordinated Debt is issued
or otherwise incurred and at least twice annually as follows:
CREDIT AGREEMENT Page 51
promptly upon receipt of the annual reserve report referred to in Section
7.1(d)(ix) hereof and each six months thereafter. Except for the scheduled
re-evaluations of the Borrowing Base, each Bank requesting a re-evaluation of
the Borrowing Base agrees to give notice to the Borrowers of such request.
9.15 Co-Agent. Bank One, Texas, N.A., as Co-Agent hereunder, shall
have no duties or liabilities.
SECTION 10. Miscellaneous.
10.1 Amendments; Etc. (a) This Agreement and any term or provision
hereof may be amended, waived or terminated by an instrument in writing executed
by the Borrowers and the Majority Banks, provided, that, notwithstanding
anything in this Agreement to the contrary, except by an instrument in writing
executed by the Borrowers and all of the Banks, no such amendment, waiver or
termination shall authorize or permit the extension of the time or times of
payment of the principal of, or interest on, the Notes or the reduction in
principal amount thereof or the rate of interest thereon, or any fees payable
hereunder, or increase the respective Commitments of any Bank, or release any
Guaranty or Borrower, or release any material amount of the Collateral from the
Liens granted pursuant hereto, or amend this Section 10.1.
(a) Any such amendment, waiver or termination shall be effective
only in the specific instance and for the specific purpose for which given.
(c) Notwithstanding anything herein to the contrary, any Bank
that has failed to fund any Advance or other amount required to be funded by
such Bank hereunder shall not be entitled to vote (whether to consent or to
withhold its consent) with respect to any amendment, modification, termination
or waiver of any provision of any Loan Document or a departure therefrom or any
direction from the Banks to the Agent and, for purposes of determining the
Majority Banks, the Commitments and Advances of such Bank shall be disregarded.
10.2 Notices. (a) Except as otherwise provided in Section 10.2(c)
hereof, all notices, requests, consents and other communications hereunder shall
be in writing and shall be delivered or sent to the Borrowers, the Banks and the
Agent at the respective addresses for notices set forth on the signature pages
hereof, or to such other address as may be designated by the Borrowers, the
Agent or any Bank by notice to the other parties hereto. All notices shall be
deemed to have been given at the time of actual delivery thereof to such
address, or if sent by the Agent or any Bank to the Borrowers by certified or
registered mail, postage prepaid, to such address, on the fifth day after the
date of mailing.
CREDIT AGREEMENT Page 52
(b) Notices by the Borrowers to the Agent with respect to
requests for Advances pursuant to Section 3.1 and notices of prepayment pursuant
to Section 4.1(c) shall be irrevocable and binding on the Borrowers.
(c) Any notice to be given by the Borrowers to the Agent pursuant
to Section 4.1(c) or Section 3.1 and any notice to be given by the Agent or any
Bank hereunder, may be given by telephone, by telex or by facsimile transmission
and must be immediately confirmed in writing in the manner provided in Section
10.2(a). Any such notice given by telephone, telex or facsimile transmission
shall be deemed effective upon receipt thereof by the party to whom such notice
is given.
10.3 Conduct No Waiver; Remedies Cumulative. No course of dealing on
the part of the Agent or the Banks, nor any delay or failure on the part of the
Agent or any Bank in exercising any right, power or privilege hereunder shall
operate as a waiver of such right, power or privilege or otherwise prejudice the
Agent's or the Banks' rights and remedies hereunder; nor shall any single or
partial exercise thereof preclude any further exercise thereof or the exercise
of any other right, power or privilege. No right or remedy conferred upon or
reserved to the Agent or the Banks under this Agreement is intended to be
exclusive of any other right or remedy, and every right and remedy shall be
cumulative and in addition to every other right or remedy given hereunder or now
or hereafter existing under any applicable law. Every right and remedy given by
this Agreement or by applicable law to the Agent or the Banks may be exercised
from time to time and as often as may be deemed expedient by them.
10.4 Reliance on and Survival of Various Provisions. All terms,
covenants, agreements, representations and warranties of the Borrowers made
herein or in any certificate or other document delivered pursuant hereto shall
be deemed to be material and to have been relied upon by the Banks,
notwithstanding any investigation heretofore or hereafter made by any Bank or on
any Bank's behalf, and those covenants and agreements of the Borrowers set forth
in Section 10.5 hereof shall survive the repayment in full of the Advances and
other obligations of the Borrowers hereunder and under Security Documents and
the termination of the Commitments. 10.5 Expenses; Indemnification. (a) The
Borrowers agree to pay and save the Agent harmless from liability for the
payment of the reasonable fees and expenses of any counsel the Agent shall
employ, in connection with the preparation, execution and delivery of this
Agreement, the Notes and the Security Documents and the consummation of the
transactions contemplated hereby and in connection with any amendments, waivers
or consents and other matters in connection therewith, and all reasonable costs
and expenses of the Agent and the Banks (including reasonable fees and expenses
of counsel) in connection with any enforcement of this Agreement, the Notes or
the Security Documents.
(b) Each of the Borrowers hereby indemnifies and agrees to hold
harmless the Banks and the Agent, and their respective officers, directors,
employees and agents, harmless from and against any and all claims, damages,
losses, liabilities, costs or expenses of
CREDIT AGREEMENT Page 53
any kind or nature whatsoever which the Banks or the Agent or any such person
may incur or which may be claimed against any of them by reason of or in
connection with any Letter of Credit, and neither any Bank nor the Agent or any
of their respective officers, directors, employees or agents shall be liable or
responsible for: (i) the use which may be made of any Letter of Credit or for
any acts or omissions of any beneficiary in connection therewith; (ii) the
validity, sufficiency or genuineness of documents or of any endorsement thereon,
even if such documents should in fact prove to be in any or all respects
invalid, insufficient, fraudulent or forged; (iii) payment by the Agent to the
beneficiary under any Letter of Credit against presentation of documents which
do not comply with the terms of any Letter of Credit, including failure of any
documents to bear any reference or adequate reference to such Letter of Credit;
(iv) any error, omission, interruption or delay in transmission, dispatch or
delivery of any message or advice, however transmitted, in connection with any
Letter of Credit; or (v) any other event or circumstance whatsoever arising in
connection with any Letter of Credit; provided, however, that the Borrowers
shall not be required to indemnify the Banks and the Agent and such other
persons, and the Banks and the Agent shall be liable to the Borrowers to the
extent, but only to the extent, of any direct, as opposed to consequential or
incidental, damages suffered by any Borrower which were caused by (A) the
Agent's wrongful dishonor of any Letter of Credit after the presentation to it
by the beneficiary thereunder of a draft or other demand for payment and other
documentation strictly complying with the terms and conditions of such Letter of
Credit, or (B) the payment by the Agent to the beneficiary under any Letter of
Credit against presentation of documents which do not comply with the terms of
the Letter of Credit to the extent, but only to the extent, that such payment
constitutes gross negligence or wilful misconduct of the Agent. It is understood
that in making any payment under a Letter of Credit the Agent will rely on
documents presented to it under such Letter of Credit as to any and all matters
set forth therein without further investigation and regardless of any notice or
information to the contrary, and such reliance and payment against documents
presented under a Letter of Credit substantially complying with the terms
thereof shall not be deemed gross negligence or wilful misconduct of the Agent
in connection with such payment. It is further acknowledged and agreed that a
Borrower may have rights against the beneficiary or others in connection with
any Letter of Credit with respect to which the Agent is alleged to be liable and
it shall be a precondition of the assertion of any liability of the Agent under
this Section that such Borrower shall first have taken reasonable steps to
enforce remedies in respect of the alleged loss against such beneficiary and any
other parties obligated or liable in connection with such Letter of Credit and
any related transactions.
(c) In consideration of the execution and delivery of this
Agreement by each Bank and the extension of the Commitments, the Borrowers
hereby indemnify, exonerate and hold the Agent, each Bank and each of their
respective officers, directors, employees and agents (collectively, the
"Indemnified Parties") free and harmless from and against any and all actions,
causes of action, suits, losses, costs, liabilities and damages, and expenses
incurred in connection therewith (irrespective of whether any such Indemnified
Party is a party to the action for which indemnification hereunder is sought),
including reasonable
CREDIT AGREEMENT Page 54
attorneys' fees and disbursements (collectively, the "Indemnified Liabilities"),
incurred by the Indemnified Parties or any of them as a result of, or arising
out of, or relating to:
(i) any transaction financed or to be financed in whole or
in part, directly or indirectly, with the proceeds of any Advance;
(ii) the entering into and performance of this Agreement and
any other agreement or instrument executed in connection herewith by any of the
Indemnified Parties (including any action brought by or on behalf of the
Borrowers as the result of any determination by the Majority Banks not to fund
any Advance in compliance with this Agreement);
(iii) any investigation, litigation or proceeding related to
any acquisition or proposed acquisition by the Borrowers or any of their
Subsidiaries of any portion of the stock or assets of any Person, whether or not
the Agent or such Bank is party thereto;
(iv) any investigation, litigation or proceeding related to
any environmental cleanup, audit, compliance or other matter relating to any
release by the Borrowers or any of their Subsidiaries of any hazardous material
or any violations of Environmental Laws; or
(v) the presence on or under, or the escape, seepage,
leakage, spillage, discharge, emission, discharging or releases from, any real
property owned or operated by the Borrowers or any Subsidiary thereof of any
Hazardous Material (including any losses, liabilities, damages, injuries, costs,
expenses or claims asserted or arising under any Environmental Law), regardless
of whether caused by, or within the control of, the Borrowers or such
Subsidiary, except for any such Indemnified Liabilities arising for the account
of a particular Indemnified Party by reason of the activities of the Indemnified
Party on the property of the Borrowers conducted subsequent to a foreclosure on
such property by the Banks or by reason of the relevant Indemnified Party's
gross negligence or wilful misconduct or breach of this Agreement, and if and to
the extent that the foregoing undertaking may be unenforceable for any reason,
the Borrowers hereby agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law. The Borrowers shall be obligated to indemnify the Indemnified
Parties for all Indemnified Liabilities subject to and pursuant to the foregoing
provisions, regardless of whether the Borrowers or any of its Subsidiaries had
knowledge of the facts and circumstances giving rise to such Indemnified
Liability.
10.6 Successors and Assigns. (a) This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns, provided that the Borrowers may not, without the prior
consent of the Majority Banks, assign their rights or obligations hereunder or
under the Notes and the Banks shall not be obligated to make any Advance
hereunder to any entity other than the Borrowers.
CREDIT AGREEMENT Page 55
(b) Any Bank may sell a participation interest to any
financial institution or institutions, and such financial institution or
institutions may further sell, a participation interest (undivided or divided)
in, the Advances and such Bank's rights and benefits under this Agreement, the
Notes and the Security Documents and to the extent of that participation, such
participant or participants shall have the same rights and benefits against the
Borrowers under Section 6.2(c) as it or they would have had if participation of
such participant or participants were the Bank making the Advances to the
Borrowers hereunder, provided, however, that (i) such Bank's obligations under
this Agreement shall remain unmodified and fully effective and enforceable
against such Bank, (ii) such Bank shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) such Bank shall
remain the holder of its Note for all purposes of this Agreement, (iv) the
Borrowers, the Agent and the other Banks shall continue to deal solely and
directly with such Bank in connection with such Bank's rights and obligations
under this Agreement, and (v) such Bank shall not grant to its participant any
rights to consent or withhold consent to any action taken by such Bank or the
Agent under this Agreement other than action requiring the consent of all of the
Banks hereunder. The Agent from time to time in its sole discretion may appoint
agents for the purpose of servicing and administering this Agreement and the
transactions contemplated hereby and enforcing or exercising any rights or
remedies of the Agent provided under this Agreement, the Notes, or otherwise. In
furtherance of such agency, the Agent may from time to time direct that the
Borrowers provide notices, reports and other documents contemplated by this
Agreement (or duplicates thereof) to such agent. The Borrowers hereby consents
to the appointment of such agent and agrees to provide all such notices, reports
and other documents and to otherwise deal with such agent acting on behalf of
the Agent in the same manner as would be required if dealing with the Agent
itself.
(c) Each Bank may, with the prior consent of the Borrowers
(which consent shall not be unreasonably withheld) and the Agent, assign to one
or more banks or other entities all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its
Commitment, the Advances owing to it and the Note or Notes and the Security
Documents held by it); provided, however, that (i) each such assignment shall be
of a uniform, and not a varying, percentage of all rights and obligations, (ii)
except in the case of an assignment of all of a Bank's rights and obligations
under this Agreement, (A) the amount of the Commitment of the assigning Bank
being assigned pursuant to each such assignment (determined as of the date of
the Assignment and Acceptance with respect to such assignment) shall in no event
be less than $1,000,000, and in integral multiples of $500,000 thereafter, or
such lesser amount as the Borrowers and the Agent may consent to and (B) after
giving effect to each such assignment, the amount of the Commitment of the
assigning Bank shall in no event be less than $1,000,000, and (iii) the parties
to each such assignment shall execute and deliver to the Agent, for its
acceptance and recording in the Register, an Assignment and Acceptance in the
form of Exhibit F hereto (an "Assignment and Acceptance"), together with any
Note or Notes subject to such assignment and a processing and recordation fee of
$3,500. Upon such execution, delivery, acceptance and recording, from and after
the effective date specified in such Assignment and Acceptance, (x) the assignee
thereunder shall be a party
CREDIT AGREEMENT Page 56
hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, have the rights and
obligations of a Bank hereunder and (y) the Bank assignor thereunder shall, to
the extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all of the remaining portion of an assigning
Bank's rights and obligations under this Agreement, such Bank shall cease to be
a party hereto).
(d) By executing and delivering an Assignment and
Acceptance, the Bank assignor thereunder and the assignee thereunder confirm to
and agree with each other and the other parties hereto as follows: (i) other
than as provided in such Assignment and Acceptance, such assigning Bank makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto; (ii) such assigning Bank makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Borrowers or the performance or observance by the Borrowers of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of the financial statements referred to in
Section 6.7 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance under the Agent, such assigning Bank or any other Bank and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (v) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers and discretion under
this Agreement as are delegated to the Agent by the terms hereof, together with
such powers and discretion as are reasonably incidental thereto; and (vi) such
assignee agrees that it will perform in accordance with their terms all of the
obligations that by the terms of this Agreement are required to be performed by
it as a Bank.
(e) The Agent shall maintain at its address designated on
the signature pages hereof a copy of each Assignment and Acceptance delivered to
and accepted by it and a register for the recordation of the names and addresses
of the Banks and the Commitment of, and principal amount of the Advances owing
to, each Bank from time to time (the "Register"). The entries in the Register
shall be conclusive and binding for all purposes, absent manifest error, and the
Borrowers, the Agent and the Banks may treat each Person whose name is recorded
in the Register as a Bank hereunder for all purposes of this Agreement. The
Register shall be available for inspection by the Borrowers or any Bank at any
reasonable time and from time to time upon reasonable prior notice.
CREDIT AGREEMENT Page 57
(f) Upon its receipt of an Assignment and Acceptance
executed by an assigning Bank and an assignee, together with any Note or Notes
subject to such assignment, the Agent shall, if such Assignment and Acceptance
has been completed, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register and (iii) give prompt notice
thereof to the Borrowers. Within five Business Days after its receipt of such
notice, the Borrowers, at its own expense, shall execute and deliver to the
Agent in exchange for the surrendered Note or Notes a new Note to the order of
such assignee in an amount equal to the Commitment assumed by it pursuant to
such Assignment and Acceptance and, if the assigning Bank has retained a
Commitment hereunder, a new Note to the order of the assigning Bank in an amount
equal to the Commitment retained by it hereunder. Such new Note or Notes shall
be in an aggregate principal amount equal to the aggregate principal amount of
such surrendered Note or Notes, shall be dated the effective date of such
Assignment and Acceptance and shall otherwise be in substantially the form of
Exhibit F hereto.
(g) The Banks may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
10.6, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrowers provided that such
proposed assignee or participant has agreed to hold such information
confidential under the terms described in Section 10.19.
(h) Additional lenders may also become Banks hereunder, with
the prior written consent of the Borrowers and the Agent, by executing an
Assumption Agreement substantially in the form of Exhibit G hereto, provided
that without the prior written consent of the Majority Banks, the aggregate
Commitments of all Banks may not exceed $200,000,000. Any Bank, subject to the
prior written approval of the Majority Banks, the Agent and the Borrowers and
subject to being paid in full for all outstanding liabilities owing to such
Bank, may be terminated as a Bank hereunder and upon such termination the
Borrowers shall have the option to select a bank to replace such terminating
bank and to assume the rights and obligations of such terminated Bank hereunder,
provided that such replacement bank is acceptable to the Agent and executes an
Assumption Agreement substantially in the form of Exhibit G hereto. Upon any
Bank being added hereto or terminated, a new schedule will be distributed by the
Agent to all Banks and the Borrowers showing the Commitment amount, the Bridge
Loan amount and the Pro Rata Share of each Bank.
10.7 CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE
CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF
ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
10.8 Table of Contents and Headings. The table of contents and
the headings of the various subdivisions hereof are for the convenience of
reference only and shall in no way modify any of the terms or provisions hereof.
CREDIT AGREEMENT Page 58
10.9 Construction of Certain Provisions. All computations
required hereunder and all financial terms used herein shall be made or
construed in accordance with GAAP unless such principles are inconsistent with
the express requirements of this Agreement. If any provision of this Agreement
refers to any action to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable whether such action
is taken directly or indirectly by such Person, whether or not expressly
specified in such provision.
10.10 Integration and Severability. This Agreement embodies the
entire agreement and understanding between the Borrowers and the Banks, and
supersedes all prior agreements and understandings, relating to the subject
matter hereof. In case any one or more of the obligations of the Borrowers under
this Agreement, the Notes or any Security Documents shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining obligations of the Borrowers shall not in any way be affected or
impaired thereby, and such invalidity, illegality or unenforceability in one
jurisdiction shall not affect the validity, legality or enforceability of the
obligations of the Borrowers under this Agreement, the Notes or any Security
Documents in any other jurisdiction.
10.11 Interest Rate Limitation. Notwithstanding any provisions of
this Agreement, the Notes or any Security Documents, in no event shall the
amount of interest paid or agreed to be paid by the Borrowers exceed an amount
computed at the highest rate of interest permissible under applicable law. If,
from any circumstances whatsoever, fulfillment of any provision of this
Agreement, the Notes or any Security Documents at the time performance of such
provision shall be due, shall involve exceeding the interest rate limitation
validly prescribed by law which a court of competent jurisdiction may deem
applicable hereto, then, ipso facto, the obligations to be fulfilled shall be
reduced to an amount computed at the highest rate of interest permissible under
applicable law, and if for any reason whatsoever the Banks shall ever receive as
interest an amount which would be deemed unlawful under such applicable law such
interest shall be automatically applied to the payment of principal of the
Advances outstanding and other obligations of the Borrowers hereunder (whether
or not then due and payable) and not to the payment of interest, or shall be
refunded to the Borrowers if such principal has been paid in full. Anything
herein to the contrary notwithstanding, the obligations of the Borrowers under
this Agreement shall be subject to the limitation that payments of interest
shall not be required to the extent that receipt of any such payment by the
Banks would be contrary to provisions of law applicable to the Banks which
limits the maximum rate of interest which may be charged or collected by the
Banks.
10.12 Counterparts. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
10.13 Independence of Covenants. All covenants hereunder shall be
given independent effect so that if a particular action or condition is not
permitted by any such covenant, the fact that it would be permitted by an
exception to, or would be otherwise within
CREDIT AGREEMENT Page 59
the limitations of, another covenant shall not avoid the occurrence of an Event
of Default or any event or condition which with notice or lapse of time, or
both, could become such an Event of Default if such action is taken or such
condition exists.
10.14 Consent to Jurisdiction. Notwithstanding the place where
any liability originates or arises, or is to be repaid, any suit, action or
proceeding arising out of or relating to this Agreement, any Security Documents,
or the Notes may be instituted in any court of competent jurisdiction in the
State of Illinois, the Borrowers and each Guarantor hereby irrevocably waives
any objection which it may have or hereafter has to the laying of such venue of
any such suit, action or proceeding and any claim that any such suit, action or
proceeding has been brought in an inconvenient forum, and the Borrowers and each
Guarantor hereby irrevocably submits its person and property to the jurisdiction
of any such court in any such suit, action or proceedings. Nothing in this
Section 10.14 shall affect the right of the Bank to bring proceedings against
the Borrowers and each Guarantor or any of their property in the courts of any
other court of competent jurisdiction.
10.15 JURY TRIAL WAIVER. THE AGENT, THE BANKS, EACH BORROWER AND
EACH GUARANTOR, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH
COUNSEL, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT ANY OF THEM
MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, THE NOTES, THE SECURITY DOCUMENTS, OR ANY RELATED INSTRUMENT OR
AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THE NOTES
OR THE SECURITY DOCUMENTS OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER
ORAL OR WRITTEN) OR ACTIONS OF ANY OF THEM. NEITHER THE AGENT, THE BANKS, ANY
BORROWER NOR ANY GUARANTOR SHALL SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR
OTHERWISE, ANY SUCH ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER
ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THESE PROVISIONS
SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY
EITHER THE AGENT AND THE BANKS OR THE BORROWERS AND THE GUARANTORS EXCEPT BY A
WRITTEN INSTRUMENT EXECUTED BY ALL OF THEM.
10.16 Joint and Several Obligations; Contribution Rights; Savings
Clause. (a) Notwithstanding anything to the contrary set forth herein or in any
Note or in any other Loan Document, the obligations of the Borrowers hereunder
and under the Notes and the other Loan Documents are joint and several.
(b) If any Borrower makes a payment in respect of the Bank
Obligations it shall have the rights of contribution set forth below against the
other Borrowers; provided that such Borrower shall not exercise its right of
contribution until all the Bank Obligations shall have been finally paid in full
in cash. If any Borrower makes a payment in
CREDIT AGREEMENT Page 60
respect of the Bank Obligations that is smaller in proportion to its Payment
Share (as hereinafter defined) than such payments made by the other Borrowers
are in proportion to the amounts of their respective Payment Shares, the
Borrower making such proportionately smaller payment shall, when permitted by
the preceding sentence, pay to the other Borrowers an amount such that the net
payments made by the Borrower in respect of the Bank Obligations shall be shared
among the Borrowers pro rata in proportion to their respective Payment Shares.
If any Borrower receives any payment that is greater in proportion to the amount
of its Payment Shares than the payments received by the other Borrowers are in
proportion to the amounts of their respective Payment Shares, the Borrower
receiving such proportionately greater payment shall, when permitted by the
second preceding sentence, pay to the other Borrowers an amount such that the
payments received by the Borrowers shall be shared among the Borrowers pro rata
in proportion to their respective Payment Shares. Notwithstanding anything to
the contrary contained in this paragraph or in this Agreement, no liability or
obligation of any Borrower that shall accrue pursuant to this paragraph shall be
paid nor shall it be deemed owed pursuant to this paragraph until all of the
Bank Obligations shall be finally paid in full in cash.
For purposes hereof, the "Payment Share" of each Borrower shall
be the sum of (a) the aggregate proceeds of the Bank Obligations received by
such Borrower plus (b) the product of (i) the aggregate Bank Obligations
remaining unpaid on the date such Bank Obligations become due and payable in
full, whether by stated maturity, acceleration, or otherwise (the "Determination
Date") reduced by the amount of such Bank Obligations attributed to all or such
Borrowers pursuant to clause (a) above, times (ii) a fraction, the numerator of
which is such Borrower's net worth on the effective date of this Agreement
(determined as of the end of the immediately preceding fiscal reporting period
of such Borrower), and the denominator of which is the aggregate net worth of
all Borrowers on such effective date.
(c) It is the intent of each Borrower, the Agent and the
Banks that each Borrower's maximum Bank Obligations shall be in, but not in
excess of:
(i) in a case or proceeding commenced by or against
such Borrower under the Bankruptcy Code on or within one year from the date on
which any of the Bank Obligations are incurred, the maximum amount that would
not otherwise cause the Bank Obligations (or any other obligations of such
Borrower to the Agent and the Banks) to be avoidable or unenforceable against
such Borrower under (A) Section 548 of the Bankruptcy Code or (B) any state
fraudulent transfer or fraudulent conveyance act or statute applied in such case
or proceeding by virtue of Section 544 of the Bankruptcy Code; or
(ii) in a case or proceeding commenced by or against
such Borrower under the Bankruptcy Code subsequent to one year from the date on
which any of the Bank Obligations are incurred, the maximum amount that would
not otherwise cause the Bank Obligations (or any other obligations of such
Borrower to the Agent and the Banks) to be avoidable or unenforceable against
such Borrower under any state fraudulent transfer or
CREDIT AGREEMENT Page 61
fraudulent conveyance act or statute applied in any such case or proceeding by
virtue of Section 544 of the Bankruptcy Code;
(iii) in a case or proceeding commenced by or against
such Borrower under any law, statute or regulation other than the Bankruptcy
Code (including, without limitation, any other bankruptcy, reorganization,
arrangement, moratorium, readjustment of debt, dissolution, liquidation or
similar debtor relief laws), the maximum amount that would not otherwise cause
the Bank Obligations (or any other obligations of such Borrower to the Agent and
the Banks) to be avoidable or unenforceable against such Borrower under such
law, statute or regulation including, without limitation, any state fraudulent
transfer or fraudulent conveyance act or statute applied in any such case or
proceeding.
(d) The Borrowers acknowledge and agree that they have
requested that the Banks make credit available to the Borrowers with each
Borrower expecting to derive benefit, directly and indirectly, from the Advances
and other credit extended by the Banks to the Borrowers.
10.17 Consents to Renewals, Modifications and Other Actions and
Events. This Agreement and all of the obligations of the Borrowers hereunder
shall remain in full force and effect without regard to and shall not be
released, affected or impaired by: (a) any amendment, assignment, transfer,
modification of or addition or supplement to the Bank Obligations, this
Agreement, any Note or any other Loan Document; (b) any extension, indulgence,
increase in the Bank Obligations or other action or inaction in respect of any
of the Loan Documents or otherwise with respect to the Bank Obligations, or any
acceptance of security for, or guaranties of, any of the Bank Obligations or
Loan Documents, or any surrender, release, exchange, impairment or alteration of
any such security or guaranties including without limitation the failing to
perfect a security interest in any such security or abstaining from taking
advantage or of realizing upon any guaranties or upon any security interest in
any such security; (c) any default by any Borrower under, or any lack of due
execution, invalidity or unenforceability of, or any irregularity or other
defect in, any of the Loan Documents; (d) any waiver by the Banks or any other
person of any required performance or otherwise of any condition precedent or
waiver of any requirement imposed by any of the Loan Documents, any guaranties
or otherwise with respect to the Bank Obligations; (e) any exercise or
non-exercise of any right, remedy, power or privilege in respect of this
Agreement or any of the other Loan Documents; (f) any sale, lease, transfer or
other disposition of the assets of any Borrower or any consolidation or merger
of any Borrower with or into any other person, corporation, or entity, or any
transfer or other disposition by any Borrower or any other holder of any shares
of capital stock of any Borrower; (g) any bankruptcy, insolvency, reorganization
or similar proceedings involving or affecting any Borrower; (h) the release or
discharge of any Borrower from the performance or observance of any agreement,
covenant, term or condition under any of the Bank Obligations or contained in
any of the Loan Documents by operation of law; or (i) any other cause whether
similar or dissimilar to the foregoing which, in the absence of this provision,
would release, affect or impair the obligations, covenants, agreements and
duties of any Borrower hereunder,
CREDIT AGREEMENT Page 62
including without limitation any act or omission by the Agent, or the Bank or
any other any person which increases the scope of such Borrower's risk; and in
each case described in this paragraph whether or not any Borrower shall have
notice or knowledge of any of the foregoing, each of which is specifically
waived by each Borrower. Each Borrower warrants to the Agent and the Banks that
it has adequate means to obtain from each other Borrower on a continuing basis
information concerning the financial condition and other matters with respect to
the Borrowers and that it is not relying on the Agent or the Banks to provide
such information either now or in the future.
10.18 Waivers, Etc. Each Borrower unconditionally waives: (a)
notice of any of the matters referred to in Section 10.17 above; (b) all notices
which may be required by statute, rule or law or otherwise to preserve any
rights of the Agent or the Banks including, without limitation, presentment to
and demand of payment or performance from the other Borrowers and protect for
non-payment or dishonor; (c) any right to the exercise by the Agent or the Banks
of any right, remedy, power or privilege in connection with any of the Loan
Documents; (d) any requirement that the Agent or the Banks in the event of any
default by any Borrower, first make demand upon or seek to enforce remedies
against, such Borrower or any other Borrower before demanding payment under or
seeking to enforce this Agreement against any other Borrower; (f) any right to
notice of the disposition of any security which the Agent or the Banks may hold
from any Borrower or otherwise and any right to object to the commercial
reasonableness of the disposition of any such security; and (g) all errors and
omissions in connection with the Agent's or any Bank's administration of any of
the Bank Obligations, any of the Loan Documents, or any other act or omission of
the Agent or any Bank which changes the scope of the Borrower's risk, except as
a result of the gross negligence or willful misconduct of the Agent or any Bank.
The obligations of each Borrower hereunder shall be complete and binding
forthwith upon the execution of this Agreement and subject to no condition
whatsoever, precedent or otherwise, and notice of acceptance hereof or action in
reliance hereon shall not be required.
10.19 Confidentiality. The Banks and the Agent shall hold all
confidential information obtained pursuant to the requirements of this Agreement
which has been identified as such by any Borrower or any Guarantor in accordance
with their customary procedures for handling confidential information of this
nature and in accordance with safe and sound banking practices and in any event
may make disclosure to its examiners, affiliates, outside auditors, counsel and
other professional advisors in connection with this Agreement or as reasonably
required by any bona fide transferee or participant in connection with the
contemplated transfer of any Note or participation therein or as required or
requested by any governmental agency or representative thereof or pursuant to
legal process. Without limiting the foregoing, it is expressly understood that
such confidential information shall not include information which, at the time
of disclosure is in the public domain or, which after disclosure, becomes part
of the public domain or information which is obtained by any Bank or the Agent
had obtained prior to the time of disclosure and identification by any Borrowers
or any Guarantor under this Section, or information received by any Bank or the
Agent from a third party. Nothing in this
CREDIT AGREEMENT Page 63
Section or otherwise shall prohibit any Bank or the Agent from disclosing any
confidential information to the other Banks or the Agent or render any of them
liable in connection with any such disclosure.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered as of this 1st day of May, 1996, which shall
be the Effective Date of this Agreement.
Address for Notices:
COMSTOCK RESOURCES, INC.
By: /s/ M. JAY ALLISON
5005 LBJ Freeway, Suite 1000 ----------------------
Dallas, Texas 75244 M. Jay Allison, its president and chief
Attention: M. Jay Allison executive officer
Telephone: (214) 701-2000
Telecopy: (214) 701-2111
Address for Notices:
COMSTOCK OIL & GAS, INC.
By: /s/ M. JAY ALLISON
5005 LBJ Freeway, Suite 1000 ----------------------
Dallas, Texas 75244 M. Jay Allison, its president and chief
Attention: M. Jay Allison executive officer
Telephone: (214) 701-2000
Telecopy: (214) 701-2111
Address for Notices:
COMSTOCK OIL & GAS - LOUISIANA, INC.
By: /s/ M. JAY ALLISON
----------------------
5005 LBJ Freeway, Suite 1000
Dallas, Texas 75244 M. Jay Allison, its president and chief
Attention: M. Jay Allison executive officer
Telephone: (214) 701-2000
Telecopy: (214) 701-2111
CREDIT AGREEMENT Page 64
COMSTOCK OFFSHORE ENERGY, INC.
5005 LBJ Freeway, Suite 1000 By: M. Jay Allison
Dallas, Texas 75244 -----------------------
Attention: M. Jay Allison M. Jay Allison, its president and chief
Telephone: (214) 701-2000 executive officer
Telecopy: (214) 701-2111
One First National Plaza THE FIRST NATIONAL BANK OF CHICAGO,
Suite 0362 as a Bank and as Agent
Chicago, Illinois 60670
Attention: Andrew Bateman By: /s/CARL SKOOG
Telephone No: (312) 732-8011 ---------------------
Facsimile No: (312) 732-3055 Its: Second vice president
Commitment Amount: $85,829,545.46
Bridge Loan Amount: $5,170,454.54
Pro Rata Share: 51.7045%
1717 Main Street BANK ONE, TEXAS, NA,
Dallas, Texas 75201 as a Bank and as Co-Agent
Attention: Mark Cranmer By: /s/MARK CRANMER
Telephone No: (214) 290-2212 ---------------------
Facsimile No: (214) 290-2627
Commitment Amount: $80,170,454.54
Bridge Loan Amount: $4,829,545.46
Pro Rata Share: 48.2955%
CREDIT AGREEMENT Page 65
CONSENT AND ACKNOWLEDGEMENT
Each of the undersigned Guarantors is hereby executing this
Agreement for the purpose of agreeing to all of the terms and provisions hereof
applicable to it, and making the representaions and warranties applicable to
it.
IN WITNESS WHEREOF, the undersigned Guarantors have caused this
Agreement to be duly executed and delivered as of this 1st day of May, 1996.
COMSTOCK MANAGEMENT CORPORATION
By:/s/M. JAY ALLISON
--------------------
M. Jay Allsion, its president and chief
executive officer
COMSTOCK NATURAL GAS, INC.
By:/s/ROLAND O. BURNS
----------------------
Roland O. Burns, its senior vice-
president and chief financial officer
CREDIT AGREEMENT Page 66